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: $ 336, 123 1,259 4,586 13,458 $ 355,426 Income Interest income Dividend income (qualified) Long-term capital gains Total revenue Expenses Salaries and wages (nonofficers) Salaries and wages, owners and officers Depreciation (MACRS-includes $9,000 $ 179 expense) Interest expense Taxes and licenses Meals (100%) Auto Insurance (nonofficer health) Accounting and legal Repairs Charitable contributions Payroll penalties Total expenses Net income $ 47,000 125,000 41,888 5, 220 15,548 15,257 5,254 6,000 2,800 1,200 2,500 500 $ 268, 167 $ 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. (Enter all amounts as positive unless otherwise indicated in the forms themselves. Round your intermediate computations and Page 1 of Form 1120S. 2020 Form 1120-S U.S. Income Tax Return for an S Corporation OMB No. 1545-0130 Do not file this form unless the corporation has filed or Department of the Treasury is attaching Form 2553 to elect to be an S corporation. Internal Revenue Service Go to www.irs.gov/Form1120S for instructions and the latest information. For calendar year 2020 or tax year beginning 2020, ending 20 A Selection effective date Name (Enter corporation name exactly as shown above.) D Employer identification number TYPE B Business activity code number OR Number, street, and room or suite no. If a P.O. box, see instructions. E Date incorporated (see instructions) PRINT City or town, state or province, country, and ZIP or foreign postal code F Total assets (see instructions) C Check if Sch. M-3 attached G is the corporation electing to be an S corporation beginning with this tax year? Yes No If "Yes," attach Form 2553 if not already filed H Check if: : ( (1) Final return (2) Name change (3) Address Change (4) Amended return 4 (5) S election termination or revocation 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 U (2) Grouped activities for section 469 passive activity purposes Caution: Include only trade or business income and expenses on lines 1a through 21. See the instructions for more information. 1a Gross receipts or sales 1a b Returns and allowances c Balance. Subtract line 1b from line 1a 1c Income 2 Cost of goods sold (attach Form 1125-A) 2 3 Gross profit. Subtract line 2 from line 10 4 Net gain (loss) from Form 4797, line 17 (attach Form 4797) 4 5 Other income (loss) (see instructionsattach statement) 6 Total income (loss). Add lines 3 through 5 6 7 Compensation of officers (see instructionsattach Form 1125-E) 7 8 Salaries and wages (less employment credits) 1b 0 3 0 4 5 0 8 0 0 9 Repairs and maintenance 9 10 Bad debts 10 11 Rents 11 12 Taxes and licenses 12 Deductions (see 13 Interest (see instructions) 13 instructions for 14 Depreciation not claimed on Form 1125-A or elsewhere on return (attach Form 4562) 14 limitations) 15 Depletion (Do not deduct oil and gas depletion.) 15 16 Advertising 16 17 Pension, profit-sharing, etc., plans 17 18 Employee benefit programs 18 19 Other deductions (attach statement) 19 20 Total deductions. Add lines 7 through 19 20 21 Ordinary business income (loss). Subtract line 20 from line 6 21 22a Excess net passive income or LIFO recapture tax (see instructions) 22a b Tax from Schedule D (Form 1120-S) 22b c Add lines 22a and 22b (see instructions for additional taxes) 22c 23a 2020 estimated tax payments and 2019 overpayment credited to 2020 23a Tax and b Tax deposited with Form 7004 23b Payments c Credit for federal tax paid on fuels (attach Form 4136) 23c d Refundable credit from Form 8827, line 50 23d e Add lines 23a through 23d 23e 24 Estimated tax penalty (see instructions). Check if Form 2220 is attached 24 25 Amount owed. If line 23e is smaller than the total of lines 22c and 24, enter amount owed 25 26 Overpayment. If line 23e is larger than the total of lines 22c and 24, enter amount overpaid 26 27 Enter amount from line 26. Credited to 2021 estimated tax Refunded 27 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, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. 0 0 0 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, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Sign May the IRS discuss this return with the preparer Here shown below? See instructions. Signature of officer Date Title Yes No Print/Type preparer's name Preparer's signature Date Check PTIN Paid if self-employed Firm's name Firm's EIN Preparer Use Only Firm's address Phone no. For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11510H Form 1120-S (2020) THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. 2021 McGraw-Hill Education. Page 3 of Form 1120S. Contains Schedule K. Page 3 Form 1120-S (2020) Schedule K Total amount 1 2 3a 3b 3c 0 4 5a Income (Loss) 5b 6 7 8a 8b 8c Shareholders' Pro Rata Share Items 1 Ordinary business income (loss) (page 1, line 21) 2 Net rental real estate income (loss) (attach Form 8825) 3a Other gross rental income (loss) b Expenses from other rental activities (attach statement) c Other net rental income (loss). Subtract line 3b from line 3a 4 Interest income 5 Dividends: : a Ordinary dividends b b Qualified dividends 6 Royalties 7 Net short-term capital gain (loss) (attach Schedule D (Form 1120-S)) 8a Net long-term capital gain (loss) (attach Schedule D (Form 1120-S)) b Collectibles (28%) gain (loss) c Unrecaptured section 1250 gain (attach statement) 9 Net section 1231 gain (loss) (attach Form 4797) 10 Other income (loss) (see instructions) Type : 11 Section 179 deduction (attach Form 4562) 12a Charitable contributions b Investment interest expense c Section 59(e)(2) expenditures (1) Type d Other deductions (see instructions) Type 13a Low-income housing credit (Section 420)(5)) b Low-income housing credit (other) c Qualified rehabilitation expenditures (rental real estate) (attach Form 3468, if applicable) d Other rental real estate credits (see instructions) Type : e Other rental credits (see instructions) Type : f Biofuel producer credit (attach Form 6478) g Other credits (see instructions) Type : 9 10 11 12a 12b Deductions (2) Amount 120(2) 12d 13a 13b 13c 13d 13e 13f 13g Credits 14d 14e 141 149 14h Foreign Transactions 141 14j 14k 141 14m 14n 140 Foreign gross income sourced at corporate level d Reserved for future use Foreign branch category f Passive category g General category h Other (attach statement) - Deductions allocated and apportioned at shareholder level i Interest expense | Other Deductions allocated and apportioned at corporate level to foreign source income k Reserved for future use I Foreign branch category m Passive category n General category o Other (attach statement) - Other information p Total foreign taxes (check one) Reduction in taxes available for credit (attach statement) r Other foreign tax information (attach statement) 15a Post-1986 depreciation adjustment Adjusted gain or loss c Depletion (other than oil and gas) d Oil, gas, and geothermal propertiesgross income e Oil, gas, and geothermal propertiesdeductions f Other AMT items (attach statement) 16a Tax-exempt interest income b Other tax-exempt income Nondeductible expenses d Distributions (attach statement if required) (see instructions) e Repayment of loans from shareholders Paid Accrued 14p 149 15a 15b 15c 15d Alternative Minimum Tax (AMT) Items 15e 15f 16a 16b 16c Items Affecting Shareholder Basis 16d 16e Form 1120-S (2020) THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX Page 4 of Form 1120S. Contains Schedule K. Page 4 Form 1120-S (2020) Schedule K Total amount 17a 17b Other Information 17c Shareholders' Pro Rata Share Items (continued) 17a Investment income b Investment expenses c Dividend distributions paid from accumulated earnings and profits d Other items and amounts (attach statement) 18 Income (loss) reconciliation. Combine the amounts on lines 1 through 10 in the far right column. From the result, subtract the sum of the amounts on lines 11 through 120 and 14p Reconciliation 18 Form 1120-S (2020) THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. 2021 McGraw-Hill Education. Page 5 of Form 1120S. Contains Schedule M-1. Page 5 Form 1120-S (2020) Schedule M-1 Reconciliation of Income (Loss) per Books With Income (Loss) per Return Note: The corporation may be required to file Schedule M-3. See instructions. 1 Net income (loss) per books 5 Income recorded on books this year not included on Schedule K, 2 Income included on Schedule K, lines 1, 2, 3, 4, 5a, 6, 7, 8, 9, and 10, lines 1 through 10 (itemize): not recorded on books this year (itemize) 0 a Tax-exempt interest $ 3 Expenses recorded on books this year not included on Schedule K, lines 1 through 12 and 14p (itemize): 6 Deductions included on Schedule K, lines 1 through 12 and 14p, not a Depreciations charged against book income this year (itemize): b Travel and entertainment $ a Depreciation $ 0 0 0 7 Add lines 5 and 6 08 Income (loss) (Schedule K, line 18). Subtract line 7 from line 4 4 Add lines 1 through 3 0 Form 1120-S (2020) THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. 2021 McGraw-Hill Education