ACNT 1347

Form 1120 Practice Tax Return

Facts in 2019:

• ABC Inc. 123 Oak Dr Houston TX 77002.
• EIN-74-1111111.
• Date Incorporated 1/1/2000.
• Total Assets $5,390,000 as of 12/31/2019.
• ABC Inc.'s Net Income per books is $440,000.
• Gross Receipts $1,000,000
• Cost of Goods Sold $400,000 (assume no beginning and ending inventory and purchases were $400,000).
• ABC Inc. uses the lower of cost or market method for valuing inventory and also uses the FIFO method for determining the cost of goods sold.Cash method of accounting is used for all other expenses other than inventory.
• Business Activity Code is 448140 and business activity and product is retail trade of family clothing.
• Compensation of $200,000 was paid to president and sole shareholder, John Doe, a U.S. citizen, SSN-222-22-2222.
• Salaries and wages paid to employees were $50,000.
• Office Rent paid for corporate headquarters was $20,000.
• ABC Inc. contributed cash of $60,000 to the Salvation Army, a non-profit charitable organization.
• Television advertising to promote the company products was $40,000
• ABC Inc. elected to carry over $1,250 of 2019 overpayment credited to 2019.
• ABC Inc. paid $25,000 each of 4 quarters for estimated tax payments in 2019
• ABC Inc. owns 10% of Better Inc., EIN:74-3333333, a domestic corporation, and received dividends in the amount of $100,000 in 2019
• ABC Inc. owns 40% of Best Inc., EIN:74-4444444, a domestic corporation, and received dividends in the amount of $100,000 in 2019.
• ABC Inc. is a calendar year taxpayer and not affiliated with any other entity.
• No dividends were declared or paid by ABC Inc.
• No Forms 1099-Misc were required to be issued.
• ABC Inc. received $10,000 from US Treasury Notes during 2019.
• ABC Inc. has always shown a profit since inception.
• Balance Sheet information follows:

Assets:

1/1/2019

12/31/2019

Cash

$250,000

$590,000

Treasury Notes

$1.200.000

$1,200,000

Prepaid Income Tax

$0

$100,000

Better Inc. Investment

$200,000

$200,000

Best Inc. Investment

$800,000

$800,000

Land

$2,500,000

$2,500,000

Total assets

$4,950,000

$5,390,000

Liabilities and Shareholders' Equity:

Capital Stock ($100 par, 1,000 shares issued & outstanding)

$100,000

$100,000

Retained Earnings

$4,850,000

$5,290,000

Total liabilities and shareholders' equity

$4,950,000

$5,390,000

John Doe has engaged you to prepare the 2019 Form 1120.