1)The solution to be uploaded should include the Modified Schedule M-1, Page 1 of Form 1120 and Page 1 of Form 4562.
Tax return information
You own a t-shirt screen printing company called Back the Pack.Back the Pack operates as a regular Corporation under Subchapter C of the Internal Revenue Code.Back the Pack incorporated on April 1, 2014 and business began on June 1, 2014.The company owns the building that the store is located in and all of the equipment that the business uses.The tax year for the Corporation is the calendar year and it is on the accrual method.The tax identification number for Back the Pack is 12-345678.
The company owns the following assets:
Land purchased on 5/1/2014 for $200,000.The land was placed in service on 6/1/2014.
Building purchased on 5/1/2014 for $655,000.The building was placed in service on 6/1/2014.
Screen printing machinery (7yr) purchased and placed in service on 6/1/2014 for $280,000.
Office furniture and fixtures (7yr) purchased and placed in service on 1/1/2015 for $55,000
Additional screen printing machinery (7yr) purchased and placed in service on 2/1/2019 for $235,000
Computerequipment (5yr) purchased and placed in service on 3/1/2019 for $35,000
Warehouse (39yr) purchased and placed in service on 9/1/2019 for $560,000
Back the Pack uses straight line depreciation for book purposes.See the book income statement in the Excel workbook for book depreciation expense for 2019.
In additional information for 2019 follows:
On November 1, 2019, the Company paid $18,000 premium for a casualty insurance policy for the period 1/1/2020 through 12/31/2020.
Specific account write-offs charged to the Allowance for Doubtful Accounts equaled $35,000
Bonuses were paid on March 28, 2020
I already did the MACRSdepreciation but I'm not sure if it is right. Here's what I did:
Land-> 0% depreciation = --
Building-> 2.564% depreciation = 16,794.20
Screen printing machinery -> 8.92% depreciation = 24,976
Office furniture -> 8.93% depreciation = 4,911.50
Additional screen printing-> 14.29% depreciation =33,581.50
Computer Equipment-> 20% depreciation = 7,000
Warehouse -> 0.749% depreciation = 4,194
1 Back the Pack, Inc. 2 Book Income Statement 3 December 31, 2019 4 Debit Credit 5 6 Sales 1,675,000 7 Cost of Goods Sold 435,000 8 Municipal Bond Interest Income 3,500 9 Salaries and Wages (all paid by 12/31/2019) 475,000 10 Bonuses 120,000 11 Advertising Costs 13,500 12 Meals Expense 5,000 13 Penalty Expense 850 14 Bad Debt Expense 22,000 15 Depreciation Expense 82,500 16 Casualty Insurance Expense 17 18 Totals 1,153,850 1,678,500 19 20 Book Income Before Taxes 524,650 21A B C D E F G Modified Schedule M-1, Reconciliation of Income (Loss) per Books with Income (Loss) per return 1 Net Income (loss) per book 524,650 Income included on Page 1, lines 1 through 10, not recorded on books this year (itemize) OUT A W 3 Expenses recorded on books this year not 10 included on Page 1, lines 12 through 26 (itemize) 11 12 13 14 15 16 17 4 Add lines 1 through 3 18 Income recorded on books not included on Page 19 1, lines 1 through 10 (itemize) 20 21 22 23 24 25 6 Deductions included on Page 1, lines 12 though 26, not charged against book income this year 26 (itemize) 27 Depreciation expense 8958 28 20 30 31 32 33 7 Add lines 5 and 6 34 8 35 Income (loss) (Page 1, line 28). Line 4 less line 7. 364562 OMB No. 1545-0172 Form Depreciation and Amortization (Including Information on Listed Property) 2019 Department of the Treasury Attach to your tax return. Internal Revenue Service (99) >Go to www.irs.gov/Form4562 for instructions and the latest information. Attachment Sequence No. 179 Name(s) shown on return Business or activity to which this form relates Identifying number Part | Election To Expense Certain Property Under Section 179 Note: If you have any listed property, complete Part V before you complete Part I. 1 Maximum amount (see instructions) . Total cost of section 179 property placed in service (see instructions) 2 Threshold cost of section 179 property before reduction in limitation (see instructions) 3 Reduction in limitation. Subtract line 3 from line 2. If zero or less, enter -0- . Dollar limitation for tax year. Subtract line 4 from line 1. If zero or less, enter -0-. If married filing separately, see instructions 6 (a) Description of property (b) Cost (business use only) (c) Elected cost 7 Listed property. Enter the amount from line 29 . . 7 8 Total elected cost of section 179 property. Add amounts in column (c), lines 6 and 7 8 9 Tentative deduction. Enter the smaller of line 5 or line 8 . 9 10 Carryover of disallowed deduction from line 13 of your 2018 Form 4562 . 10 11 Business income limitation. Enter the smaller of business income (not less than zero) or line 5. See instructions 11 12 Section 179 expense deduction. Add lines 9 and 10, but don't enter more than line 11 12 13 Carryover of disallowed deduction to 2020. Add lines 9 and 10, less line 12 13 Note: Don't use Part II or Part Ill below for listed property. Instead, use Part V. Part II Special Depreciation Allowance and Other Depreciation (Don't include listed property. See instructions.) 14 Special depreciation allowance for qualified property (other than listed property) placed in service during the tax year. See instructions . . 14 15 Property subject to section 168(f)(1) election . 15 16 Other depreciation (including ACRS) 16 Part III MACRS Depreciation (Don't include listed property. See instructions.) Section A 17 MACRS deductions for assets placed in service in tax years beginning before 2019 . . . 17 18 If you are electing to group any assets placed in service during the tax year into one or more general asset accounts, check here . . Section B-Assets Placed in Service During 2019 Tax Year Using the General Depreciation System a) Classification of property (b) Month and year placed in c) Basis for depreciation (d) Recovery service (business/investment use only-see instructions) period (e) Convention if) Method (g) Depreciation deduction 19a 3-year property b 5-year property c 7-year property d 10-year property e 15-year property f 20-year property g 25-year property 25 yrs. S/L h Residential rental 27.5 yrs. MM S/L property 27.5 yrs . MM S/L i Nonresidential real 39 yrs. MM S/L property MM S/L Section C-Assets Placed in Service During 2019 Tax Year Using the Alternative Depreciation System 20a Class life S/L b 12-year 12 yrs. S/L c 30-year 30 yrs. MM S/L d 40-year 40 yrs. MM S/L Part IV Summary (See instructions.) 21 Listed property. Enter amount from line 28 21 22 Total. Add amounts from line 12, lines 14 through 17, lines 19 and 20 in column (g), and line 21. Enter here and on the appropriate lines of your return. Partnerships and S corporations-see instructions 22 23 For assets shown above and placed in service during the current year, enter the portion of the basis attributable to section 263A costs . 23 For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 12906N Form 4562 (2019)1120 U.S. Corporation Income Tax Return OMB No. 1545-0123 Form Department of the Treasury For calendar year 2019 or tax year beginning , 2019, ending , 20 Internal Revenue Service >Go to www.irs.gov/Form1120 for instructions and the latest information 2019 A Check if: Name 3 Employer identification number 1a Consolidated return (attach Form 851) Lifeonlife consoli- TYPE dated return . . OR Number, street, and room or suite no. If a P.O. box, see instructions. Date incorporated 2 Personal holding co. PRINT (attach Sch. PH) . City or town, state or province, country, and ZIP or foreign postal code Total assets (see instructions) 3 Personal service corp see instructions) . Schedule M-3 attached E Check if: (1) Initial return (2) Final return 3) Name change 4) Address change 1a Gross receipts or sales 1a Returns and allowances . 1b C LAWN Balance. Subtract line 1b from line 1a Cost of goods sold (attach Form 1125-A) . Gross profit. Subtract line 2 from line 1c . Income Dividends and inclusions (Schedule C, line 23) Interest 8 6 00 - Gross rents Gross royalties Capital gain net income (attach Schedule D (Form 1120)) Net gain or (loss) from Form 4797, Part II, line 17 (attach Form 4797) Other income (see instructions-attach statement) . 11 Total income. Add lines 3 through 10 on deductions. Compensation of officers (see instructions-attach Form 1125-E) Salaries and wages (less employment credits) Repairs and maintenance Bad debts . Rents 16 Taxes and licenses 17 Interest (see instructions) 18 Charitable contributions . 19 Depreciation from Form 4562 not claimed on Form 1125-A or elsewhere on return (attach Form 4562) . 20 21 Deductions (See instructions Depletion . Advertising 22 Pension, profit-sharing, etc., plans 23 Employee benefit programs 24 Reserved for future use 25 Other deductions (attach statement) 26 Total deductions. Add lines 12 through 26 . 27 Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line 11. 28 29a Net operating loss deduction (see instructions) 29a b Special deductions (Schedule C, line 24) . 29b c Add lines 29a and 29b 29c Tax, Refundable Credits, and 30 Taxable income. Subtract line 29c from line 28. See instructions 30 Total tax (Schedule J, Part I, line 11) . 31 32 Payments 2019 net 965 tax liability paid (Schedule J, Part II, line 12) . Total payments, credits, and section 965 net tax liability (Schedule J, Part III, line 23) 33 Estimated tax penalty. See instructions. Check if Form 2220 is attached 34 Amount owed. If line 33 is smaller than the total of lines 31, 32, and 34, enter amount owed 35 Overpayment. If line 33 is larger than the total of lines 31, 32, and 34, enter amount overpaid 36 Enter amount from line 36 you want: Credited to 2020 estimated tax Refunded 37 Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, Sign and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. May the IRS discuss this return Here with the preparer shown below? ignature of officer Date Title See instructions. Yes No Paid Print/Type preparer's name Preparer's signature Date Check if PTIN Preparer self-employed Use Only Firm's name Firm's EIN Firm's address Phone no For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11450Q Form 1120 (2019)
