Corporate Tax Return Assignment

ACCY 312 Spring 2020

Facts:

ABC Inc. is a calendar year, accrual basis taxpayer engaged in the manufacture and sale of furniture.ABC Inc. was incorporated on January 8, 1995, and its tax information is as follows:

ABC Inc.

2445 Main St.

Champaign, IL 61821

Employer Identification Number: 98-7654321

During the year, ABC Inc. had the following items of income and expense:

Item

Amount

Gross Sales

$2,000,000

Cost of Goods Sold

($740,000)

Salaries and Wages

($250,000)

Repairs and Maintenance

($70,000)

Business Meals Expense (total)

($4,300)

Dividends received from XYZ Inc. (ABC Inc. is a 33% shareholder of XYZ Inc.)

$40,000

Long-Term Capital Gain

$5,200

Long-Term Capital Loss

($6,000)

Charitable Contributions (all cash)

($70,000)

Interest expense

($9,000)

Rent expense

($50,000)

Advertising expense

($2,200)

State income tax expense

($15,000)

In addition:

ABC Inc. had two officers, Susan B. Smith - President, and John T. Williams - Treasurer.The officers were paid salaries of $350,000 and $250,000, respectively (and in addition to the $250,000 salaries expense above).

ABC Inc. only has one asset subject to depreciation.It is a machine press that it purchased on June 28, 2018 for $100,000.ABC Inc. did not elect any 179 immediate expensing or bonus depreciation for the asset when it acquired it in 2018.

ABC Inc. made a $30,000 cash distribution to its shareholders in 2019

ABC Inc. made four, equal, timely estimated tax payments for 2019, of $12,000 each (hint: there is no estimated tax penalty).If there is any overpayment, ABC Inc. elects to apply it to the 2020 tax year.

ABC Inc.'s only outstanding stock is Common.

ABC Inc. had the following balance sheet assets as of 12/31/18 and 12/31/19

12/31/18

12/31/19

Cash

$85,000

???

Accounts Receivable

$33,000

$22,000

Inventories

$200,000

$200,000

Fixed Assets

$100,000

$100,000

Accumulated Depreciation

($14,290)

???

Other Current Asset

-

$1,077

Total Assets

$403,710

???

Accounts Payable

$65,000

$52,000

Long-Term Loan Payable

$305,000

$255,000

Total Liabilities

$370,000

$307,000

Paid-In-Capital

$1,000

$1,000

Retained Earnings

$32,710

???

Total Liabilities & Equity

$403,710

???

Using the above information, complete the following tax forms for ABC Inc.:

2019 Form 1120, pages 1, 2, 3, & 6

https://www.irs.gov/pub/irs-pdf/f1120.pdf