Assume that you have set up an Emirati corporation that does business in many countries, including in the USA. Your company is set up as a large US C-corporation and your company is required to submit Form 1120 to report corporate income. and Schedule C to report dividend income from other companies that your corporation owns.

Your company is in the manufacturing. The cost of goods sold is calculated by adding the beginning of period inventory to the inventory purchases and subtracting the end of period inventory. Fill in Form 1125-A to calculate cost of goods sold. Any other items in Form 1125-A can be left blank.

For dividends, your company only has one source of dividend incomefrom a domestic corporation in which your company has a 30% ownership share. You can calculate the amount of dividend received deduction on Schedule C.

You must fill out both Schedule C and Form 1125-A, before completing Form 1120.

For form 1120 and all other forms, if nothing is listed, assume the number is zero. Hence, you do not have to fill out Schedules K, L, M-1, M-2 or any other supporting schedules, forms, and documents.

For the name of your corporation, list your name and the names of the classmates in your group, if you are filing one return for the group. You have the option of one or two people per group. The fillable tax forms are on Blackboard.

Specific numbers for your group are on the next page. All numbers are in US dollars. Numbers are not listed in any specific order except they are identified as either income or costs.

Fill out Schedule C, Form 1125-A and Form 1120 (pages 1, 2, and 3).

Determine either the amount of refund you receive or what you owe the US government on April 15, 2019.

Foum 1125-A Cost of Goods Sold 9a Check all methods used for valuing closing inventory: (i) cost (ii) Lower of cost or market (iii) Other (Specify method used and attach explanation.) b Check if there was a writedown of subnormal goods c Check if the LIFO inventory method was adopted this tax year for any goods (if checked, attach Form 970) d If the LIFO inventory method was used for this tax year, enter amount of closing inventory computed under LIFO . e If property is produced or acquired for resale, do the rules of section 263A apply to the entity? See instructions... Yes No f Was there any change in determining quantities, cost, or valuations between opening and closing inventory? If "Yes," attach explanation Yes No \begin{tabular}{lll} \hline Section references are to the Internal & merchandise is an income-producing & Small business taxpayer. A small \\ Revenue Code unless otherwise noted. & factor. See Regulations section 1.471-1. If & business taxpayer is a taxpayer that (a) has \\ What's New & inventories are required, you generally & average annual gross receipts of $25 \\ must use an accrual method of accounting & million or less (indexed for inflation) for the \\ Small business taxpayers. For tax years & for sales and purchases of inventory items. & 3 prior tax years, and (b) is not a tax shelter \\ beginning after December 31, 2017, the & Exception for certain taxpayers. A small & (as defined in section 448(d)(3)). See Pub. \\ following apply. & business taxpayer (defined below), can & 538. \\ - A small business taxpayer (defined & adopt or change its accounting method to & Uniform capitalization rules. The uniform \\ below), may use a method of accounting for & account for inventories in the same manner & capitalization rules of section 263A \\ inventories that either: (1) treats inventories & as material and supplies that are non- & generally require you to capitalize, or \\ as nonincidental materials and supplies, or & incidental, or conform to its treatment of & include in inventory, certain costs incurred \\ (2) conforms to the taxpayer's financial & inventories in an applicable financial & in connection with the following. \\ accounting treatment of inventories. & statement (as defined in section 451(b)(3)), & - The production of real property and \\ - A small business taxpayer is not required & or if it does not have an applicable financial & tangible personal property held in inventory \\ to capitalize costs under section 263A. & statement, the method of accounting used & orheld \end{tabular} Form 1125-A (Rev. 11-2018) Page 2 Specific Instructions Per-unit retain allocations. A cooperative Filers that use erroneous valuation Line 1. Inventory at Beginning of is allowed to deduct from its taxable methods must change to a method Year income amounts paid during the payment permitted for federal income tax purposes. If you are changing your method of period for the tax year as per-unit retain Use Form 3115 to make this change. See accounting for the current tax year, you qualified per-unit retain certificates, or Pub. 538. must refigure last year's closing inventory_ other property with respect to marketing Ling Ling. Method of valuing closing using the new method of accounting. Enter occurring during the tax year. A per-unit inventory. On line 9a, check the method(s) the result on line 1. If there is a difference retain allocation is any allocation from a inger lower of between last year's closing inventory and cooperative to a patron for products cost market, the term "market" (for the refigured amount, attach an marketed for him without reference to the normal goods) means the current bid price explanation and take it into account when cooperative net earnings. A qualified per- prevailing on the inventory valuation date figuring any section 481(a) adjustment. unit retain certificate is any per-unit retain for the particular merchandise in the Line2.Purchasestotakeintoaccountatitsstateddollarmanufacturer,marketappliestothebasiccertificatethatthedistributeehasagreedvolumeusuallypurchasedbythefiler.For Reduce purchases by items withdrawn for amount. elements of cost-raw materials, labor, and personal use. For a partnership, the cost of Nonqualified per-unit retain certificates burden. If section 263A applies, the basic these items should be shown on Schedule redeemed this year. Include the amount elements of cost must reflect the current K and Schedule K-1 as distributions to paid in money or other property (except bich price all direct costs and all indirect partners. amounts already included as per-unit retain costs properly allocable to goods on hand Line 4. Additional Section 263A certificates) to patrons to redeem at inventory date. If you elected a simplified method of issuance for a nonqualified per-unit retain normal prices or unusable in the normal accounting, enter on line 4 the balance of certificate. However, the cooperative may way because the goods are subnormal due section 263A costs paid or incurred during take a deduction in the year the certificate to damage, imperfections, shopwear, the tax year not includible on lines 2,3, and is redeemed, subject to the stated dollar change of style, odd or broken lots, or 5. amount of the certificate. See section 1383. other similar causes, including secondIf you elected the simplified production Also see the instructions for Form 1120-C, hand goods taken in exchange. The goods method, additional section 263A costs are line 30h, for a special rule for figuring the may be valued at the bona fide selling generally those costs, other than interest, cooperative's tax in the year of redemption price, minus the direct cost of disposition that were not capitalized under your of a nonqualified per-unit retain certificate. (but not less than scrap value). Bona fide method of accounting immediately prior to Line 7. Inventory at End of Year selling price means actual offering of the effective date of section 263A, but are See Regulations sections 1.263A-1 through goods during a period ending not later than now required to be capitalized under 1.263A3 for details on figuring the amount 30 days after inventory date. section 263A. For details, see Regulations of additional section 263A costs to be Lines 9c and 9d. LIFO method. If this is section 1.263A-2(b). included in ending inventory. the first year the Last-in, First-out (LIFO) Ifyouelectedthesimplifiedresalemethod,additionalsection263AcostsareLine8.CostofGoodsSoldLinventorymethodwaseitheradoptedorextendedtoinventorygoodsnotpreviously generally those costs incurred with respect Enter the amount from line 8 on your tax valued under the LIFO method provided in to the following categories. return as follows. Filers of Form 1120, section 472 , attach Form 970 , Application - Off-site storage or warehousing. 1120C,1120S, and 1065, enter cost of To Use LIFO Inventory Method, or a - Purchasing. goods sold on page 1, line 2. Filers of Form statement with the information required by - Handling, such as processing, 1120F, enter cost of goods sold on Section II, line 2. On line 9d, enter the amount of total assembling, repackaging, and transporting. colosing inventories computed under - General and administrative costs (mixed Lines 9a Through 9f. Inventory section 472. Estimates are acceptable. service costs). Valuation Methods your changed or extended your Line 5. Other Costs Inventories can be valued at: inventory method to LIFO and had to write Enter on line 5 any costs paid or incurred - Cost, up the opening inventory to cost in the year during the tax year not entered on lines 2 - Cost or market value (whichever is lower), as other income, on your applicable return, through 4. Attach a statement listing details or proportionately over a 3-year period that of the costs. Any other method approved by the IRS begins with the year of the LIFO election. Special Rules for Cooperatives_ that conforms to the requirements of the Cooperatives are allowed to deduct certain per-unit retain allocations. Include these costs on line 5. Attach a statement listing details of per-unit retain allocations paid in: - Qualified per-unit retain certificates, - Money or other property (except nonqualified per-unit certificates), and - Nonqualified per-unit retain certificates redeemed this year. Note: Entities using the LIFO method that information. We need it to ensure that you The time needed to complete and file make an S corporation election or transfer are complying with these laws and to allow this form will vary depending on individual LIFO inventory to an S corporation in a us to figure and collect the right amount of circumstances. The estimated burden for nonrecognition transaction may be subject tax. business taxpayers filing this form is to an additional tax attributable to the LIFO You are not required to provide the Yored under OMB control number recapture amount. See the instructions for information requested on a form that is 15450123 and is included in the estimates Form 1120, Schedule J, line 11. subject to the Paperwork Reduction Act shown in the instructions for their business Line 9e. If property is produced or unless the form displays a valid OMB income tax return. acquired for resale and the rules of section control number. Books or records relating If you have comments concerning the 263A apply to the corporation, cooperative, to a form or its instructions must be accuracy of these time estimates or partnership, or other applicable entity, retained as long as their contents may suggestions for making this form simpler, check the "Yes" box on line 9e. become material in the administration of would be happy to hear from you. See PaperworkReductionActNotice.WereturnsandreturninformationareanyInternalRevenuelaw.Generally,taxwhichthisformisfiled.theinstructionsforthet ask for the information on this form to carry confidential, as required by section 6103. out the Internal Revenue laws of the United States. You are required to give us the Form 1120 (2018) Page 2 Foum 1125-A Cost of Goods Sold 9a Check all methods used for valuing closing inventory: (i) cost (ii) Lower of cost or market (iii) Other (Specify method used and attach explanation.) b Check if there was a writedown of subnormal goods c Check if the LIFO inventory method was adopted this tax year for any goods (if checked, attach Form 970) d If the LIFO inventory method was used for this tax year, enter amount of closing inventory computed under LIFO . e If property is produced or acquired for resale, do the rules of section 263A apply to the entity? See instructions... Yes No f Was there any change in determining quantities, cost, or valuations between opening and closing inventory? If "Yes," attach explanation Yes No \begin{tabular}{lll} \hline Section references are to the Internal & merchandise is an income-producing & Small business taxpayer. A small \\ Revenue Code unless otherwise noted. & factor. See Regulations section 1.471-1. If & business taxpayer is a taxpayer that (a) has \\ What's New & inventories are required, you generally & average annual gross receipts of $25 \\ must use an accrual method of accounting & million or less (indexed for inflation) for the \\ Small business taxpayers. For tax years & for sales and purchases of inventory items. & 3 prior tax years, and (b) is not a tax shelter \\ beginning after December 31, 2017, the & Exception for certain taxpayers. A small & (as defined in section 448(d)(3)). See Pub. \\ following apply. & business taxpayer (defined below), can & 538. \\ - A small business taxpayer (defined & adopt or change its accounting method to & Uniform capitalization rules. The uniform \\ below), may use a method of accounting for & account for inventories in the same manner & capitalization rules of section 263A \\ inventories that either: (1) treats inventories & as material and supplies that are non- & generally require you to capitalize, or \\ as nonincidental materials and supplies, or & incidental, or conform to its treatment of & include in inventory, certain costs incurred \\ (2) conforms to the taxpayer's financial & inventories in an applicable financial & in connection with the following. \\ accounting treatment of inventories. & statement (as defined in section 451(b)(3)), & - The production of real property and \\ - A small business taxpayer is not required & or if it does not have an applicable financial & tangible personal property held in inventory \\ to capitalize costs under section 263A. & statement, the method of accounting used & orheld \end{tabular} Form 1125-A (Rev. 11-2018) Page 2 Specific Instructions Per-unit retain allocations. A cooperative Filers that use erroneous valuation Line 1. Inventory at Beginning of is allowed to deduct from its taxable methods must change to a method Year income amounts paid during the payment permitted for federal income tax purposes. If you are changing your method of period for the tax year as per-unit retain Use Form 3115 to make this change. See accounting for the current tax year, you qualified per-unit retain certificates, or Pub. 538. must refigure last year's closing inventory_ other property with respect to marketing Ling Ling. Method of valuing closing using the new method of accounting. Enter occurring during the tax year. A per-unit inventory. On line 9a, check the method(s) the result on line 1. If there is a difference retain allocation is any allocation from a inger lower of between last year's closing inventory and cooperative to a patron for products cost market, the term "market" (for the refigured amount, attach an marketed for him without reference to the normal goods) means the current bid price explanation and take it into account when cooperative net earnings. A qualified per- prevailing on the inventory valuation date figuring any section 481(a) adjustment. unit retain certificate is any per-unit retain for the particular merchandise in the Line2.Purchasestotakeintoaccountatitsstateddollarmanufacturer,marketappliestothebasiccertificatethatthedistributeehasagreedvolumeusuallypurchasedbythefiler.For Reduce purchases by items withdrawn for amount. elements of cost-raw materials, labor, and personal use. For a partnership, the cost of Nonqualified per-unit retain certificates burden. If section 263A applies, the basic these items should be shown on Schedule redeemed this year. Include the amount elements of cost must reflect the current K and Schedule K-1 as distributions to paid in money or other property (except bich price all direct costs and all indirect partners. amounts already included as per-unit retain costs properly allocable to goods on hand Line 4. Additional Section 263A certificates) to patrons to redeem at inventory date. If you elected a simplified method of issuance for a nonqualified per-unit retain normal prices or unusable in the normal accounting, enter on line 4 the balance of certificate. However, the cooperative may way because the goods are subnormal due section 263A costs paid or incurred during take a deduction in the year the certificate to damage, imperfections, shopwear, the tax year not includible on lines 2,3, and is redeemed, subject to the stated dollar change of style, odd or broken lots, or 5. amount of the certificate. See section 1383. other similar causes, including secondIf you elected the simplified production Also see the instructions for Form 1120-C, hand goods taken in exchange. The goods method, additional section 263A costs are line 30h, for a special rule for figuring the may be valued at the bona fide selling generally those costs, other than interest, cooperative's tax in the year of redemption price, minus the direct cost of disposition that were not capitalized under your of a nonqualified per-unit retain certificate. (but not less than scrap value). Bona fide method of accounting immediately prior to Line 7. Inventory at End of Year selling price means actual offering of the effective date of section 263A, but are See Regulations sections 1.263A-1 through goods during a period ending not later than now required to be capitalized under 1.263A3 for details on figuring the amount 30 days after inventory date. section 263A. For details, see Regulations of additional section 263A costs to be Lines 9c and 9d. LIFO method. If this is section 1.263A-2(b). included in ending inventory. the first year the Last-in, First-out (LIFO) Ifyouelectedthesimplifiedresalemethod,additionalsection263AcostsareLine8.CostofGoodsSoldLinventorymethodwaseitheradoptedorextendedtoinventorygoodsnotpreviously generally those costs incurred with respect Enter the amount from line 8 on your tax valued under the LIFO method provided in to the following categories. return as follows. Filers of Form 1120, section 472 , attach Form 970 , Application - Off-site storage or warehousing. 1120C,1120S, and 1065, enter cost of To Use LIFO Inventory Method, or a - Purchasing. goods sold on page 1, line 2. Filers of Form statement with the information required by - Handling, such as processing, 1120F, enter cost of goods sold on Section II, line 2. On line 9d, enter the amount of total assembling, repackaging, and transporting. colosing inventories computed under - General and administrative costs (mixed Lines 9a Through 9f. Inventory section 472. Estimates are acceptable. service costs). Valuation Methods your changed or extended your Line 5. Other Costs Inventories can be valued at: inventory method to LIFO and had to write Enter on line 5 any costs paid or incurred - Cost, up the opening inventory to cost in the year during the tax year not entered on lines 2 - Cost or market value (whichever is lower), as other income, on your applicable return, through 4. Attach a statement listing details or proportionately over a 3-year period that of the costs. Any other method approved by the IRS begins with the year of the LIFO election. Special Rules for Cooperatives_ that conforms to the requirements of the Cooperatives are allowed to deduct certain per-unit retain allocations. Include these costs on line 5. Attach a statement listing details of per-unit retain allocations paid in: - Qualified per-unit retain certificates, - Money or other property (except nonqualified per-unit certificates), and - Nonqualified per-unit retain certificates redeemed this year. Note: Entities using the LIFO method that information. We need it to ensure that you The time needed to complete and file make an S corporation election or transfer are complying with these laws and to allow this form will vary depending on individual LIFO inventory to an S corporation in a us to figure and collect the right amount of circumstances. The estimated burden for nonrecognition transaction may be subject tax. business taxpayers filing this form is to an additional tax attributable to the LIFO You are not required to provide the Yored under OMB control number recapture amount. See the instructions for information requested on a form that is 15450123 and is included in the estimates Form 1120, Schedule J, line 11. subject to the Paperwork Reduction Act shown in the instructions for their business Line 9e. If property is produced or unless the form displays a valid OMB income tax return. acquired for resale and the rules of section control number. Books or records relating If you have comments concerning the 263A apply to the corporation, cooperative, to a form or its instructions must be accuracy of these time estimates or partnership, or other applicable entity, retained as long as their contents may suggestions for making this form simpler, check the "Yes" box on line 9e. become material in the administration of would be happy to hear from you. See PaperworkReductionActNotice.WereturnsandreturninformationareanyInternalRevenuelaw.Generally,taxwhichthisformisfiled.theinstructionsforthet ask for the information on this form to carry confidential, as required by section 6103. out the Internal Revenue laws of the United States. You are required to give us the Form 1120 (2018) Page 2