{ "key_pair_value_system": true, "answer_rating_count": "", "question_feedback_html": { "html_star": "", "html_star_feedback": "" }, "answer_average_rating_value": "", "answer_date_js": "2024-06-17T09:07:54-04:00", "answer_date": "2024-06-17 09:07:54", "is_docs_available": "", "is_excel_available": "", "is_pdf_available": "", "count_file_available": 0, "main_page": "student_question_view", "question_id": "3184875", "url": "\/study-help\/questions\/corporate-tax-return-problem-required-complete-tofu-tacos-incs-tt-3184875", "question_creation_date_js": "2024-06-17T09:07:54-04:00", "question_creation_date": "Jun 17, 2024 09:07 AM", "meta_title": "[Solved] CORPORATE TAX RETURN PROBLEM Required: Co | SolutionInn", "meta_description": "Answer of - CORPORATE TAX RETURN PROBLEM Required: Complete Tofu Tacos Inc.'s (TT) Current Year's Federal Form 1120 and all applic | SolutionInn", "meta_keywords": "corporate,tax,return,problem,required,complete,tofu,tacos,inc,s,tt,current", "question_title_h1": "CORPORATE TAX RETURN PROBLEM Required: Complete Tofu Tacos Inc.'s (TT) Current Year's Federal Form 1120 and all applicable schedules using a tax preparation software program", "question_title": "CORPORATE TAX RETURN PROBLEM Required: Complete Tofu Tacos Inc.'s (TT) Current Year's", "question_title_for_js_snippet": "CORPORATE TAX RETURN PROBLEM Required Complete Tofu Tacos Inc 's (TT) Current Year's Federal Form 1120 and all applicable schedules using a tax preparation software program of your choice and the information provided below The return with all schedules that would be required to be filed should be put in my dropbox in pdf format Also, Include memo to the client(word file) detailing any assumptions and or elections that you have made and any recommendations that you have for reducing their future taxes This memorandum should put in my dropbox in word format Form 4562 for depreciation is not required Include the amount of tax depreciation given in the problem on the appropriate line on the first page of Form 1120 Assume that TT does not owe any alternative minimum tax If any information is missing, use reasonable assumptions to fill in the gaps The forms, schedules, and instructions can be found at the IRS Web site (www irs gov) The instructions can be helpful in completing the forms if you do not use tax preparation software Facts Sal Monella, Tao Mane and Carne Asco each own one third of the common stock of Tofu Tacos Inc (TT) TT was incorporated on February 4, 2008 It has only common stock outstanding and operates as a C corporation for tax purposes TT caters all types of social events throughout southern California TT is located at 1541 Dumpster Way, Huntington Beach, CA 92647 TT's Employer Identification Number is 38 7562491 TT's business activity is catering food and services Its business activity code is 722300 The shareholders also work as officers for the corporation as follows Sal is the chief executive officer and president (Social Security number 231 54 8976) Tao is the executive vice president and chief operating officer (Social Security number 798 56 3241) Carne is the vice president of finance (Social Security number 879 21 4536) All officers devote 100 percent of their time to the business and all officers are U S citizens TT uses the accrual method of accounting and has a calendar year end TT made four equal estimated tax payments of $20,000 each Its tax liability last year was $70,000 If it has overpaid its federal tax liability, TT would like to receive a refund TT paid a dividend of $30,000 to its shareholders on November 1 of the Current Tax Year TT had ample earnings and profits (E P) to absorb the distribution The following is TT's audited income statement for Current Tax Year Tofu Tacos Income Statement Current Tax Year Revenue from sales $2,000,000 Cost of goods sold (Food) 400,000 Gross profit from operations $1,600,000 Other income Capital loss 20,000 Dividend income 30,000 Interest income 15,000 Gross income $1,625,000 Expenses Compensation 950,000 Depreciation 10,000 Bad debt expense 15,000 Meals and entertainment 3,000 Maintenance 6,000 Property taxes 11,000 State income taxes 45,000 Other taxes 44,000 Rent 60,000 Interest 5,000 Advertising 52,000 Professional services 16,000 Employee benefits 32,000 Supplies 5,000 Other expenses 27,000 Total expenses 1,281,000 Income before taxes 344,000 Federal income tax expense 103,000 Net income after taxes $241,000 Notes 1 TT's inventory related purchases during Current Tax Year were $410,000 It values its inventory based on cost using the FIFO inventory cost flow method Assume the rules of 263A do not apply to BCS 2 Of the $15,000 interest income, $2,000 was from a City of Huntington Beach bond that was used to fund public activities (issued in 2005), $1,000 was from a Costa Mesa city bond used to fund private activities (issued in 2004), $1,000 was from a U S Treasury bond, and the remaining $11,000 was from a money market account at Madoff Investments 3 TT's dividend income came from Malo Menudo (MM) TT owned 20,000 shares of the stock in Malo Menubo at the beginning of the year This represented 10 percent of MM outstanding stock 4 On October 1 of the Current Tax Year, TT sold 2,000 shares of its MM stock for $25,000 It had originally purchased these shares on April 18, 2008, for $40,000 After the sale, TT owned 9 percent of MM 5 TT's compensation is as follows oSal $150,000 oTao $150,000 oCarne $150,000 oOther $500,000 6 TT wrote off $25,000 in accounts receivable as uncollectible during the Current Tax Year 7 TT used straight line depreciation to determine book income and accelerated depreciation for tax determination purposes The tax depreciation was $28,000 None of the depreciation should be claimed on Form 1125A 8 The $5,000 interest expense was from a business loan 9 Other expenses include $6,000 for premiums paid on term life insurance policies for which TTis the beneficiary The policies cover the lives of Sal, Tao, and Carne The following are TT's audited balance sheets as of January 1st, and December 31 st of the Current Tax Year Tofu Tacos Balance Sheets January 1st and December 31, 20XX 20XX 1 Jan 31 Dec Assets Cash $ 180,000 $324,000 Accounts receivable 560,000 580,000 Allowance for doubtful accounts 60,000 50,000 Inventory 140,000 150,000 U S government bonds 20,000 20,000 State and local bonds 120,000 120,000 Investments in stock 400,000 360,000 Fixed assets 140,000 160,000 Accumulated depreciation 50,000 60,000 Other assets 20,000 21,000 Total assets $1,470,000 $1,625,000 Liabilities and Shareholders' Equity Accounts payable $280,000 $240,000 Other current liabilities 20,000 18,000 Other liabilities 40,000 26,000 Capital stock 400,000 400,000 Retained earnings 730,000 941,000 Total liabilities and shareholders' equity $1,470,000 $1,625,000 CORPORATE TAX RETURN PROBLEM Required Complete Tofu Tacos Inc 's (TT) Current Year's Federal Form 1120 and all applicable schedules using a tax preparation software program of your choice and the information provided below The return with all schedules that would be required to be filed should be put in my dropbox in pdf format Also, Prepare a memo to the client (word file) detailing any assumptions and or elections that you have made and any recommendations that you have for reducing their future taxes This memorandum should put in my dropbox in word format Form 4562 for depreciation is not required Include the amount of tax depreciation given in the problem on the appropriate line on the first page of Form 1120 Assume that TT does not owe any alternative minimum tax If any information is missing, use reasonable assumptions to fill in the gaps The forms, schedules, and instructions can be found at the IRS Web site (www irs gov) The instructions can be helpful in completing the forms if you do not use tax preparation software Facts Sal Monella, Tao Mane and Carne Asco each own one third of the common stock of Tofu Tacos Inc (TT) TT was incorporated on February 4, 2008 It has only one class of stock outstanding and operates as a C corporation for tax purposes TT caters all types of social events throughout southern California TT is located at 1541 Dumpster Way, Huntington Beach, CA 92647 TT's Employer Identification Number is 38 7562491 TT's business activity is catering food and services Its business activity code is 722300 The shareholders also work as officers for the corporation as follows o Sal is the chief executive officer and president (Social Security number 231 54 8976) o Tao is the executive vice president and chief operating officer (Social Security number 798 56 3241) o Carne is the vice president of finance (Social Security number 879 21 4536) All officers devote 100 percent of their time to the business and all officers are U S citizens TT uses the accrual method of accounting and has a calendar yearend TT made four equal estimated tax payments of $20,000 each Its tax liability last year was $70,000 If it has overpaid its federal tax liability, TT would like to receive a refund TT paid a dividend of $30,000 to its shareholders on November 1 of the Current Tax Year TT had ample earnings and profits (E P) to absorb the distribution The following is TT's audited income statement for Current Tax Year Tofu Tacos Income Statement Current Tax Year Revenue from sales Cost of goods sold (Food) $2,000,000 400,000 Gross profit from operations Other income Capital loss Dividend income Interest income Gross income Expenses Compensation Depreciation Bad debt expense Meals and entertainment Maintenance Property taxes State income taxes Other taxes Rent Interest Advertising Professional services Employee benefits Supplies Other expenses Total expenses Income before taxes Federal income tax expense Net income after taxes Notes $1,600,000 20,000 30,000 15,000 $1,625,000 950,000 10,000 15,000 3,000 6,000 11,000 45,000 44,000 60,000 5,000 52,000 16,000 32,000 5,000 27,000 1,281,000 344,000 103,000 $ 241,000 1 TT's inventory related purchases during Current Tax Year were $410,000 It values its inventory based on cost using the FIFO inventory cost flow method Assume the rules of 263A do not apply to BCS 2 Of the $15,000 interest income, $2,000 was from a City of Huntington Beach bond that was used to fund public activities (issued in 2005), $1,000 was from a Costa Mesa city bond used to fund private activities (issued in 2004), $1,000 was from a U S Treasury bond, and the remaining $11,000 was from a money market account at Madoff Investments 3 TT's dividend income came from Malo Menudo (MM) TT owned 20,000 shares of the stock in Malo Menudo at the beginning of the year This represented 10 percent of MM outstanding stock 4 On October 1 of the Current Tax Year, TT sold 2,000 shares of its MM stock for $25,000 It had originally purchased these shares on April 18, 2008, for $40,000 After the sale, TT owned 9 percent of MM 5 TT's compensation is as follows o Sal $150,000 o Tao $150,000 o Carne $150,000 o Other $500,000 2 TT wrote off $25,000 in accounts receivable as uncollectible during the Current Tax Year 3 TT used straight line depreciation to determine book income and accelerated depreciation for tax determination purposes The tax depreciation was $28,000 None of the depreciation should be claimed on Form 1125A 4 The $5,000 interest expense was from a business loan 5 Other expenses include $6,000 for premiums paid on term life insurance policies for which TTis the beneficiary The policies cover the lives of Sal, Tao, and Carne The following are TT's audited balance sheets as of January 1st, and December 31st of the Current Tax Year Tofu Tacos Balance Sheets January 1st and December 31, 20XX 20XX 1 Jan 31 Dec Assets Cash Accounts receivable Allowance for doubtful accounts Inventory U S government bonds State and local bonds Investments in stock Fixed assets Accumulated depreciation Other assets $180,000 560,000 60,000 140,000 20,000 120,000 400,000 140,000 50,000 20,000 $ 324,000 580,000 50,000 150,000 20,000 120,000 360,000 160,000 60,000 21,000 Total assets Liabilities and Shareholders' Equity Accounts payable Other current liabilities Other liabilities Capital stock Retained earnings Total liabilities and shareholders' equity $1,470,000 $ 280,000 20,000 40,000 400,000 730,000 $1,470,000 $1,625,000 $ 240,000 18,000 26,000 400,000 941,000 $1,625,000", "question_description": "\"image

CORPORATE TAX RETURN PROBLEM <\/p>

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