Part 2. Tax Return for Tom M Oil Inc. (20 Possible Points)

After evaluating the income tax issues, you must prepare the final tax return for Tom

Oil, Inc. with Schedule K-1's for Tom and Donna.

The competitor, Energy Star Corp. (Buyer), paid the purchase price of $495,700 plus

the value of the oil inventory at cost on the day of the closing, allocated as follows:

• Truck 1 70,000

• Truck 2 60,000

• Truck 3 50,000

• Supplies Parts (cost-$4,300) 8,200

• Restrictive Covenant 7,500

• Goodwill 300,000

• Oil Inventory purchased at cost, generated no gain or loss

*Restrictive Covenant: As a condition of the purchase, the Buyer demanded that

Tom M, Donna M and Tom M Oil Inc. agree not to own or operate, directly or

indirectly, another oil company for three years, in exchange for $7,500.

Tom M Oil Inc. ceased business as of April 30, 2022 after the sale and has distributed

the proceeds to Tom and Donna in complete liquidation during 2022.