Audit Report

Additional Information

Jim’s Auto Body (Inc., or LLC) 1122 Sesame Street New York, NY, 10002 EIN 90-1234567 Dated incorporated January 1st, 2010

Jim Jameson 8701 Electric Avenue New York, NY, 10002SSN: 123-45-6789

· Jim Jameson took on Fred as a partner for the LLC. Fred owns 50% of all profits, losses, and capital. You do not have to complete Part 2 K, L, or M on the 1065 Schedule K1 (there is not enough information provided).

· $4,500 salary expense is officer’s compensation for the corporation and guaranteed payment to partners for the LLC.

· $55,000 equipment is 7-year property in its 5th year of service and was placed into service in the middle of the year, thus using the half-year convention. Use the correct table from the IRS—Publication 946: How to Depreciate Property—to determine the tax deductible depreciation. Form 4562 is not required.

· Jim made four quarterly estimated tax payments of $800 each over the course of the year.

· In accordance with IRS instructions: "Corporations with total receipts and total assets at the end of the tax year less than $250,000 are not required to complete Schedules L, M-1, and M-2" (Internal Revenue Service, n.d.). This also applies to the LLC.

· For the 1065 Schedule K1, you will not have enough information to fill out Part 2 K, L, and M.

	Jim's Auto Body
Revenues:
Service Revenue		28,000
Total Revenue		28,000
Expenses:
Salary Expense	4,500
Rent Expense	1,200
Utility Expense	300
Depreciation Expense	500
Insurance Expense	100
Supply Expense	400
		7,000
Net Income		21,000

	Jim's Auto Body
	Balance Sheet
	As of April 30, 2015
Assets
Cash	101,800
Acct Rec'able	20,000
PP In	1,100
Equipment	55,000
Accu. Dep.		500
Supplies	2,600
Total Assets	180,000 ______________________________________________ ______________________________________________
Liabilities and Stockholders' Equity
Liabilities:
Accounts Payable		8,000
Salary Payable		3,000
Total Liabilities		11000.00
Stockholders' Equity:
Common Stock		150,000
Retained Earnings		19000
	______________________________________________ ______________________________________________
Total Stockholders' Equity		169000.00
Total Liabilities and Stockholders' Equity	180,000
	______________________________________________ ______________________________________________