Corporate Tax Return Problem 1 Required:

***MUST BE DONE ON 2020 TAX FORMS***

Complete Alvins Music Inc.s (AMI) 2020 Form 1120, Schedule D, and Schedule G (if applicable) using the information provided below.

Neither Form 4562 for depreciation nor Form 4797 for the sale of the equipment is required. Include the amount of tax depreciation and the tax gain on the equipment sale given in the problem (or determined from information given in the problem) on the appropriate lines on the first page of Form 1120.

Forms 1125-A and 1125-E are not required.

If any information is missing, use reasonable assumptions to fill in the gaps.

The forms, schedules, and instructions can be found at the IRS website (www.irs.gov).

The instructions can be helpful in completing the forms. PLEASE NOTE: the 2021 Corporate tax return forms are not available, so please use the 2020 forms AND APPLY the 2021 rules as documented in your textbook.

Facts: Alvins Music Inc. (AMI) was formed in 2010 by Alvin Jones and Theona Smith. Alvin and Theona officially incorporated their store on June 12, 2011.

AMI sells (retail) all kinds of music-related products including musical instruments, sheet music, CDs, and DVDs.

Alvin owns 60 percent of the outstanding common stock of AMI and Theona owns the remaining 40 percent.

AMI is located at 355 Music Way, East Palo Alto, California 94303.

AMIs Employer Identification Number is 29-5748859.

AMIs business activity is retail sales of music-related products.

Its business activity code is 451140.

Officers of the corporation are as follows:

o Alvin is the chief executive officer and president (Social Security number 123-45-6789).

o Theona is the executive vice president (Social Security number 978-65-4321).

o Gwen Givens is the vice president over operations (Social Security number 789-12-3456).

o Carlson Bannister is the secretary (Social Security number 321-54-6789).

All officers devote 100 percent of their time to the business and all officers are U.S. citizens.

Neither Gwen nor Carlson owns any stock in AMI.

AMI uses the accrual method of accounting and has a calendar year-end.

AMI made payments that require Form 1099s, and will file the Form 1099s before the tax return is filed.

AMI made four equal estimated tax payments of $43,000 each.

Its tax liability last year was $175,000. If it has overpaid its federal tax liability, AMI would like to receive a refund.

AMI paid a dividend of $80,000 to its shareholders on December 1. AMI had sufficient earnings and profits (E&P) to cover the distribution.