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While James Craig and his former classmate Paul Dolittle both studied accounting at school, they ended up pursuing careers in professional cake decorating. Their company, Good to Eat $($GTE$),$ specializes in custom$-$sculpted cakes for weddings, birthdays, and other celebrations. James and Paul formed the business at the beginning of $2023,$ and each contributed $$120,000$ in exchange for a $50$ percent ownership interest. GTE also borrowed $$480,000$ from a local bank. Both James and Paul had to personally guarantee the loan. Both owners provide significant services for the business. The following information pertains to GTE's $2023$ activities:

GTE uses the cash method of accounting $($for both book and tax purposes$)$ and reports income on a calendar$-$year basis.

GTE received $$800,000$ of sales revenue and reported $$370,000$ of cost of goods sold $($it did not have any ending inventory$).$

GTE paid $$65,000$ compensation to James, $$65,000$ compensation to Paul, and $$75,000$ of compensation to other employees $($assume these amounts include applicable payroll taxes, if any$).$

GTE paid $$22,000$ of rent for a building and equipment, $$27,000$ for advertising, $$33,600$ in interest expense, $$4,700$ for utilities, and $$2,700$ for supplies.

GTE contributed $$8,500$ to charity.

GTE received a $$2,400$ qualified dividend from a great stock investment $($it owned $2$ percent of the corporation distributing the dividend$),$ and it recognized $$2,200$ in short$-$term capital gain when it sold some of the stock.

On December $1,2023,$ GTE distributed $$27,000$ to James and $$27,000$ to Paul.

GTE has qualified property of $$307,000($unadjusted basis$).$

b$-1.$ Assume James and Paul formed GTE as an LLC$.$

Complete GTE's Form $1065,$ page $1$ and Form $1065$ Schedule K$.$

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