Comprehensive Problem 11-1 Olive Corporation was formed and began operations on January 1, 2018. The corporation's income statement for the year and the balance sheet at year-end are presented below. The Olive Corporation Income Statement for the Year Ended December 31, 2018 Gross income from operations $270,000 Qualified dividends received from a 35 percent-owned domestic corporation 20,000 Total gross income $290,000 Cost of goods sold (110,000) Total income $180,000 Other expenses: Compensation of officers $77,000 Salaries and wages 30,000 Bad debts (direct charge- 9,000 offs) Repairs 3,000 Depreciation for book and 10,000 tax purposes Advertising 2,000 Payroll taxes 16,000 Total other expenses (147,000) Net income before federal $33,000 income tax expense) The Olve Corporation Balance Sheet as of December 31, 2018 Assets: Cash $30,000 Accounts receivable 20,000 Inventory (at cost) 70,000 Equipment 90,000 Less: accumulated (10,000) depreciation Total assets $200,000 Liabilities and owners' equity: Accounts payable $ 6,200 Note payable (due in 10 85,000 years) Common stock 80,000 Retained earnings 2.NO Total liabilities and owners' equity $200,000 The corporation made estimated tax payments of $5,000 and the corporation's book federal income tax expense is equal to the federal tax liability. Assume any overpayment is credited to the 2019 estimated tax Required: Prepare Form 1120 1. Enter all amounts as positive numbers, except for a "loss". If required, enter a "loss" as a negative number on the tax form. 2. If an amount box does not require an entry, or the answer is zero, enter "0". (a) Schedule Dividends, Inclusions, and Special Deductions (see instructions) Special (b) % Dividends and inclusions deductions (a) (b) 1 Dividends from less-than-20%-owned domestic corporations (other than debt-financed stock).... 2 Dividends from 20%-or-more-owned domestic corporations (other than debt-financed stock)... 20,00 16,00 X 65 see instructions 23.3 Dividends on certain debt-financed stock of domestic and foreign corporations 4 Dividends on certain preferred stock of less-than-20%-owned public utilities 5 Dividends on certain preferred stock of 20%-or-more-owned public utilities 6 Dividends from less-than-20%-owned foreign corporations and certain FSCS 7 Dividends from 20%-or-more-owned foreign corporations and certain FSCS Dividends from wholly owned foreign subsidiaries .. 26.7 100 Subtotal. Add lines 1 through 8. See instructions for limitations ......... 16,00 see Jinstructions 16,00 10 Dividends from domestic corporations received by a small business investment company operating under the Small Business Investment Act of 1958... Dividends from affiliated group members ........... Dividends from certain FSCs ........... 13 Foreign-source portion of dividends received from a specified 10%-owned foreign corporation (excluding hybrid dividends) (see instructions)... 14 Dividends from foreign corporations not included on line 3, 6, 7, 8, 11, 12, or 13 (including any hybrid dividends).. Section 965(a) inclusion.... see instructions 16a Subpart F inclusions derived from the sale by a controlled foreign corporation (CFC) of the stock of a lower-tier foreign corporation treated as a dividend (attach Form(s) 5471) (see instructions) ........... b Subpart F inclusions derived from hybrid dividends of tiered corporations (attach Form(s) 5471) (see instructions)................. 100
