Chapter 15 TRP 15-1

Phil Williams and Liz Johnson are 60% and 40% shareholders, respectively, in WJ Corporation, a Subchapter S corporation. The corporation had the following activity during the year:

Income	$ 336,123
Interest income	1,259
Dividend income (qualified)	4,586
Long-term capital gains	13,458
Total revenue	$ 355,426
Expenses
Salaries and wages (nonofficers)	$ 47,000
Salaries and wages, owners and officers	125,000
Depreciation (MACRSincludes $9,000 179 expense)	41,888
Interest expense	5,220
Taxes and licenses	15,548
Nonrestaurant meals (100%)	15,257
Auto	5,254
Insurance (nonofficer health)	6,000
Accounting and legal	2,800
Repairs	1,200
Charitable contributions	2,500
Payroll penalties	500
Total expenses	$ 268,167
Net income	$ 87,259

During the year, the corporation made a distribution of $20,000, in total, to its shareholders. Complete page 1, Schedule K, and Schedule M-1 of Form 1120S.

Note: Enter all amounts as positive unless otherwise indicated in the forms themselves. Round your intermediate computations and final answers to the nearest whole dollar value. Instructions can be found on certain cells within the forms.

G Is the corparation electing to be an S corporation beginning with this tax year? See instructions. Yes No H Check if. (2) Name change (3) Address Change (4) Arnended return (5) S election termination I Enter the number of shareholders who were shareholders during any part of the tax year J Check if corporation: (1) Aggregated activities for section 465 at-risk purposes (2) Grouped activities for section 469 passive activity purposes Caution: Include only trade or business income and expenses on lines 1 a through 21 . See the instructions for more information. Prepare Form 1120 S for WJ Corporation. Page 4 of Form 1120S. Contains Schedule K. THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM IT SELF. DO NOT USE THIS FORM FOR TAX FILING S OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. 92022 McGraw-Hill Education. Page 5 of Form 1120 S. Contains Schedule M-1. G Is the corparation electing to be an S corporation beginning with this tax year? See instructions. Yes No H Check if. (2) Name change (3) Address Change (4) Arnended return (5) S election termination I Enter the number of shareholders who were shareholders during any part of the tax year J Check if corporation: (1) Aggregated activities for section 465 at-risk purposes (2) Grouped activities for section 469 passive activity purposes Caution: Include only trade or business income and expenses on lines 1 a through 21 . See the instructions for more information. Prepare Form 1120 S for WJ Corporation. Page 4 of Form 1120S. Contains Schedule K. THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM IT SELF. DO NOT USE THIS FORM FOR TAX FILING S OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. 92022 McGraw-Hill Education. Page 5 of Form 1120 S. Contains Schedule M-1