Could you take a look at the attached tax forms and see if I filled them out correctly. It is a group assignment, and I only have to provide IRS Forms 3800 and 5884. I'm also attaching the story problem (with financial statements etc.) and the IRS instructions for the forms.

Thank you for your assistance.

Form 3800 Department of the Treasury Internal Revenue Service (99) General Business Credit OMB No. 1545-0895 Information about Form 3800 and its separate instructions is at www.irs.gov/form3800. You must attach all pages of Form 3800, pages 1, 2, and 3, to your tax return. Identifying number Name(s) shown on return Mike's Sporting Goods, Inc. Part I 1 2 3 4 5 6 7 8 9 Current Year Credit for Credits Not Allowed Against Tentative Minimum Tax (TMT) (See instructions and complete Part(s) III before Parts I and II) 0 00 . 3 0 00 . 4 0 00 . 5 6 0 . 00 00 . . 7 214,500 00 Add lines 1, 3, 4, and 5 . . . . . . . . . . . . . . . . . . . . . . . 52-9746858 1 General business credit from line 2 of all Parts III with box A checked . . . . . . . . Passive activity credits from line 2 of all Parts III with box B checked 2 Enter the applicable passive activity credits allowed for 2015 (see instructions) . . . . . Carryforward of general business credit to 2015. Enter the amount from line 2 of Part III with box C checked. See instructions for statement to attach . . . . . . . . . . . . Carryback of general business credit from 2016. Enter the amount from line 2 of Part III with box D checked (see instructions) . . . . . . . . . . . . . . . . . . . . Part II 2015 Attachment Sequence No. 22 . 00 Allowable Credit Regular tax before credits: Individuals. Enter the sum of the amounts from Form 1040, lines 44 and 46, or the sum of the amounts from Form 1040NR, lines 42 and 44 . . . . . . . . Corporations. Enter the amount from Form 1120, Schedule J, Part I, line 2; or the applicable line of your return . . . . . . . . . . . . . . . . . . Estates and trusts. Enter the sum of the amounts from Form 1041, Schedule G, lines 1a and 1b; or the amount from the applicable line of your return . . . . Alternative minimum tax: Individuals. Enter the amount from Form 6251, line 35 . . . . . . . Corporations. Enter the amount from Form 4626, line 14 . . . . . . . Estates and trusts. Enter the amount from Schedule I (Form 1041), line 56 . . . . Add lines 7 and 8 } } . . . 8 0 00 214,500 00 0 00 . . . . . . . . . 9 . 10a 10b . . . . . . . . . 10c 11 Net income tax. Subtract line 10c from line 9. If zero, skip lines 12 through 15 and enter -0- on line 16 11 214,500 00 12 Net regular tax. Subtract line 10c from line 7. If zero or less, enter -0- 12 214,500 13 Enter 25% (.25) of the excess, if any, of line 12 over $25,000 (see instructions) . . . . . . . . . . . . . . . . . . 13 47,375 00 14 Tentative minimum tax: Individuals. Enter the amount from Form 6251, line 33 . Corporations. Enter the amount from Form 4626, line 12 . Estates and trusts. Enter the amount from Schedule I (Form 1041), line 54 . . . . . . . . . . . . . 14 0 00 15 16 17 47,375 167,125 00 00 0 00 . . . . . . . . 10a Foreign tax credit . . . . . . . . . b Certain allowable credits (see instructions) . c Add lines 10a and 10b . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 16 17 . . . . . . . . . . . . . . } . Enter the greater of line 13 or line 14 . . . . . . . . . . . . . . . . . . . . Subtract line 15 from line 11. If zero or less, enter -0- . . . . . . . . . . . . . . Enter the smaller of line 6 or line 16 . . . . . . . . . . . . . . . . . . . . C corporations: See the line 17 instructions if there has been an ownership change, acquisition, or reorganization. For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 12392F Form 3800 (2015) Form 3800 (2015) Part II Page 2 Allowable Credit (Continued) Note. If you are not required to report any amounts on lines 22 or 24 below, skip lines 18 through 25 and enter -0- on line 26. 18 Multiply line 14 by 75% (.75) (see instructions) . . . . . . . . . . . . . . . . . 18 0 00 19 Enter the greater of line 13 or line 18 . . . . . . . . . . . . . . . . . 19 47,375 00 20 Subtract line 19 from line 11. If zero or less, enter -0- . . . . . . . . . . . . . . 20 167,125 00 21 Subtract line 17 from line 20. If zero or less, enter -0- . . . . . . . . . . . . . . 21 167,125 00 22 Combine the amounts from line 3 of all Parts III with box A, C, or D checked . . . . . . . 22 0 00 23 Passive activity credit from line 3 of all Parts III with box B checked 24 Enter the applicable passive activity credit allowed for 2015 (see instructions) . . . . . . 24 0 00 25 Add lines 22 and 24 . . . . . . 25 0 00 26 Empowerment zone and renewal community employment credit allowed. Enter the smaller of line 21 or line 25 . . . . . . . . . . . . . . . . . . . . . . . . . . 26 0 00 27 Subtract line 13 from line 11. If zero or less, enter -0- . . . . . . . . . . . . . . 27 167,125 00 28 Add lines 17 and 26 . . . . . . . . . . . . . . . 28 0 00 29 Subtract line 28 from line 27. If zero or less, enter -0- . . . . . . . . . . . . . . 29 167,125 00 30 Enter the general business credit from line 5 of all Parts III with box A checked . . . . . . 30 6,000 00 31 Reserved . . . . . . . 31 32 Passive activity credits from line 5 of all Parts III with box B checked 33 Enter the applicable passive activity credits allowed for 2015 (see instructions) . . . . . . 33 0 00 34 Carryforward of business credit to 2015. Enter the amount from line 5 of Part III with box C checked and line 6 of Part III with box G checked. See instructions for statement to attach . . 34 0 00 Carryback of business credit from 2016. Enter the amount from line 5 of Part III with box D checked (see instructions) . . . . . . . . . . . . . . . . . . . . . . . 35 0 00 36 Add lines 30, 33, 34, and 35 . 37 Enter the smaller of line 29 or line 36 38 Credit allowed for the current year. Add lines 28 and 37. Report the amount from line 38 (if smaller than the sum of Part I, line 6, and Part II, lines 25 and 36, see instructions) as indicated below or on the applicable line of your return: 35 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 . . . . . . . . 32 . . . . . . . . . . . . . . . . . . . 36 6,000 00 . . . . . . . . . . . . . . . . . . . 37 6,000 00 6,000 00 Individuals. Form 1040, line 54, or Form 1040NR, line 51 Corporations. Form 1120, Schedule J, Part I, line 5c . . Estates and trusts. Form 1041, Schedule G, line 2b . . . . . . . . . . . . . . . . . . . . } . . . . 38 Form 3800 (2015) Page 3 Form 3800 (2015) Identifying number Name(s) shown on return Mike's Sporting Goods, Inc. Part III 52-9746858 General Business Credits or Eligible Small Business Credits (see instructions) Complete a separate Part III for each box checked below. (see instructions) A General Business Credit From a Non-Passive Activity E Reserved B F General Business Credit From a Passive Activity Reserved General Business Credit Carryforwards Eligible Small Business Credit Carryforwards C G D H General Business Credit Carrybacks Reserved I If you are filing more than one Part III with box A or B checked, complete and attach first an additional Part III combining amounts from all Parts III with box A or B checked. Check here if this is the consolidated Part III . . . . . . . . (a) Description of credit Note. On any line where the credit is from more than one source, a separate Part III is needed for each pass-through entity. 1a b c d e f g h i j k l m n o p q r s t u v w x y z aa bb zz 2 3 4a b c d e f g h i j z 5 6 Investment (Form 3468, Part II only) (attach Form 3468) . . . . . . . Reserved . . . . . . . . . . . . . . . . . . . . . . Increasing research activities (Form 6765) . . . . . . . . . . . Low-income housing (Form 8586, Part I only) . . . . . . . . . . Disabled access (Form 8826) (see instructions for limitation) . . . . . Renewable electricity, refined coal, and Indian coal production (Form 8835) Indian employment (Form 8845) . . . . . . . . . . . . . . . Orphan drug (Form 8820) . . . . . . . . . . . . . . . . . New markets (Form 8874) . . . . . . . . . . . . . . . . . Small employer pension plan startup costs (Form 8881) (see instructions for limitation) Employer-provided child care facilities and services (Form 8882) (see instructions for limitation) . . . . . . . . . . . . . . . . . Biodiesel and renewable diesel fuels (attach Form 8864) . . . . . . . Low sulfur diesel fuel production (Form 8896) . . . . . . . . . . Distilled spirits (Form 8906) . . . . . . . . . . . . . . . . Nonconventional source fuel . . . . . . . . . . . . . . . Energy efficient home (Form 8908) . . . . . . . . . . . . . . Energy efficient appliance . . . . . . . . . . . . . . . . Alternative motor vehicle (Form 8910) . . . . . . . . . . . . . Alternative fuel vehicle refueling property (Form 8911) . . . . . . . Reserved . . . . . . . . . . . . . . . . . . . . . . Mine rescue team training (Form 8923) . . . . . . . . . . . . Agricultural chemicals security (carryforward only) . . . . . . . . . Employer differential wage payments (Form 8932) . . . . . . . . . Carbon dioxide sequestration (Form 8933) . . . . . . . . . . . Qualified plug-in electric drive motor vehicle (Form 8936) . . . . . . Qualified plug-in electric vehicle (carryforward only) . . . . . . . . New hire retention (carryforward only) . . . . . . . . . . . . . General credits from an electing large partnership (Schedule K-1 (Form 1065-B)) Other . . . . . . . . . . . . . . . . . . . . . . . Add lines 1a through 1zz and enter here and on the applicable line of Part I Enter the amount from Form 8844 here and on the applicable line of Part II . Investment (Form 3468, Part III) (attach Form 3468) . . . . . . . . Work opportunity (Form 5884) . . . . . . . . . . . . . . . Biofuel producer (Form 6478) . . . . . . . . . . . . . . . Low-income housing (Form 8586, Part II) . . . . . . . . . . . . Renewable electricity, refined coal, and Indian coal production (Form 8835) Employer social security and Medicare taxes paid on certain employee tips (Form 8846) Qualified railroad track maintenance (Form 8900) . . . . . . . . . Small employer health insurance premiums (Form 8941) . . . . . . . Reserved . . . . . . . . . . . . . . . . . . . . . . Reserved . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . Add lines 4a through 4z and enter here and on the applicable line of Part II . Add lines 2, 3, and 5 and enter here and on the applicable line of Part II . . . . . . . . . (b) If claiming the credit from a pass-through entity, enter the EIN . . . . . (c) Enter the appropriate amount 1a 1b 1c 1d 1e 1f 1g 1h 1i 1j 1k 1l 1m 1n 1o 1p 1q 1r 1s 1t 1u 1v 1w 1x 1y 1z 1aa 1bb 1zz 2 3 4a 4b 4c 4d 4e 4f 4g 4h 4i 4j 4z 5 6 0 0 00 00 6,000 00 6,000 6,000 00 00 Form 3800 (2015) Form 5884 Department of the Treasury Internal Revenue Service OMB No. 1545-0219 Work Opportunity Credit Information Attach to your tax return. about Form 5884 and its separate instructions is at www.irs.gov/form5884. Name(s) shown on return Mike's Sporting Goods 1 2015 Attachment Sequence No. 77 Identifying number 52-9746858 Enter on the applicable line below the total qualified first- or second-year wages paid or incurred during the tax year, and multiply by the percentage shown, for services of employees who are certified as members of a targeted group. 25% (0.25) 1a 0 00 b Qualified first-year wages of employees who worked for you at least 400 hours . . . . . . . . . . $ 40% (0.40) 1b 0 00 c Qualified second-year wages of employees certified as long-term family assistance recipients . . . . . . $ 50% (0.50) 1c 0 00 Add lines 1a, 1b, and 1c. See instructions for the adjustment you must make to salaries and wages . . . . . . . . . . . . . . . . . . . . . . . . . 2 0 00 Work opportunity credit from partnerships, S corporations, cooperatives, estates, and trusts (see instructions) . . . . . . . . . . . . . . . . . . . . . . . 3 6,000 00 Add lines 2 and 3. Cooperatives, estates, and trusts, go to line 5. Partnerships and S corporations, stop here and report this amount on Schedule K. All others, stop here and report this amount on Form 3800, Part III, line 4b . . . . . . . . . . . . 4 6,000 00 Amount allocated to patrons of the cooperative or beneficiaries of the estate or trust (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . 5 0 00 Cooperatives, estates, and trusts, subtract line 5 from line 4. Report this amount on Form 3800, Part III, line 4b . . . . . . . . . . . . . . . . . . . . . . 6 6,000 00 2 a Qualified first-year wages of employees who worked for you at least 120 hours but fewer than 400 hours . $ 3 4 5 6 For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 13570D Form 5884 (2015) 2015 Instructions for Form 3800 Department of the Treasury Internal Revenue Service General Business Credit Section references are to the Internal Revenue Code unless otherwise noted. Future Developments For the latest information about developments related to Form 3800 and its instructions, such as legislation enacted after they were published, go to www.irs.gov/form3800. General Instructions Partnerships and S corporations must always complete the source credit form. All other filers whose only source for a credit listed on Form 3800, Part III, is from a partnership, S corporation, estate, trust, or cooperative can report the credit directly on Form 3800. The following exceptions apply. You are claiming the investment credit (Form 3468) or the biodiesel and renewable diesel fuels credit (Form 8864) in Part III with box A or B checked. You are an estate or trust and the source credit must be allocated to beneficiaries. For more details, see the Instructions for Form 1041, U.S. Income Tax Return for Estates and Trusts, Schedule K-1, box 13. You are a cooperative and the source credit can or must be allocated to patrons. For more details, see the Instructions for Form 1120-C, U.S. Income Tax Return for Cooperative Associations, Schedule J, line 5c. TIP Who Must File You must file Form 3800 to claim any of the general business credits. Carryback and Carryforward of Unused Credit The carryforward may have to be reduced in the event of any CAUTION recapture event (change in ownership, change in use of property, etc.). If a section 1603 grant is received, the carryforward must be reduced to zero. For further information, see Form 4255, Recapture of Investment Credit. ! If you can't use part or all of your general business credit because of the tax liability limit (Part II, line 38, is less than the sum of Part I, line 6, and Part II, lines 25 and 36), carry the unused credit back one year. To carry back an unused credit, file Jul 02, 2015 an amended return (Form 1040X, Amended U.S. Individual Income Tax Return, Form 1120X, Amended U.S. Corporation Income Tax Return, or other amended return) for the prior tax year or an application for tentative refund (Form 1045, Application for Tentative Refund, or Form 1139, Corporation Application for Tentative Refund). Generally, if you file an application for a tentative refund, it must be filed by the end of the tax year following the tax year in which the credit arose. No part of the unused credit for any year attributable to any credit can be carried back to any tax year before the first tax year for which that credit was first allowable. See Credit Ordering Rule, later, to determine which credits are allowed first. TIP If you have an unused credit after carrying it back 1 year, carry it forward to each of the 20 tax years after the year of the credit. Any qualified business credits (as defined in section 196(c)) that are unused after the last tax year of the 20-year carryforward period (or at the time an individual taxpayer dies or other taxpayer, such as a corporation or partnership, ceases to exist) may be taken as a deduction in the earlier of: The tax year following the last tax year of the 20-year carryforward period, or The tax year in which the individual taxpayer dies or other taxpayer ceases to exist. Carryforward of the energy credit and the renewable electricity credit. The energy credit must be recaptured in full if a grant is paid under Public Law 111-5, section 1603, for investment in energy property that an energy credit was previously claimed or for investment in renewable energy property that an election was made to treat the property as energy property. Recapture is applicable to those amounts previously constituting the qualified basis for an energy credit, including progress expenditures, that are also the basis for the 1603 grant. Recapture is accomplished as follows. 1. Any portion of the energy credit related to that property that was used to offset tax in a prior tax year must be added to tax in the tax year the 1603 grant is received. Recaptured tax is calculated on Form 4255. 2. Any carryforward of the energy credit related to that property is reduced to Cat. No. 10622Q zero to recapture the unused portion of the credit. See Form 4255 for any other recapture event (change in ownership or change in use of property, etc.). Carryforward of certain Form 6478 credits. The alcohol mixture credit, the alcohol credit, and the small ethanol producer credit expired for fuels sold or used after 2011. The unused alcohol mixture credits, alcohol credits, and small ethanol producer credits (for all tax years) can't be carried to a tax year beginning after 2014. Change in Filing or Marital Status Your general business credit is limited to your tax liability. Therefore, if you filed a joint return in a carryback or carryforward year and your marital status or filing status has changed, you may need to figure your separate tax liability in that carryback or carryforward year. This would apply if: You filed as single in the credit year, but filed a joint return in the carryback or carryforward year; You filed a joint return in the credit year, but filed a joint return with a different spouse in the carryback or carryforward year; or You were married and filed a separate return in the credit year, but filed a joint return with the same or a different spouse in the carryback or carryforward year. Determine your separate tax liability in the carryback or carryforward year as follows. 1. Figure your tax for the carryback or carryforward year as though you were married filing a separate return. 2. Figure your spouse's tax in that year as though he or she was married filing a separate return. 3. Add the amounts in steps (1) and (2). 4. Divide the amount in step (1) by the amount in step (3). The result should be rounded to at least three decimal places. 5. Multiply the decimal in step (4) by the total tax shown on your joint return for the carryback or carryforward year. The result is your separate tax liability and a carryback or carryforward credit is applied against this amount only. Although your carryback or carryforward of the credit is limited to your separate tax liability, the amount of your refund resulting from the carryback or carryforward is further limited to your share of the joint overpayment. This is found by subtracting your separate tax liability (as determined above) from your contribution toward the payment. Unless you have an agreement or clear evidence of each spouse's contribution toward the payment of the joint liability, your contribution includes the tax withheld on your wages and your share of the joint estimated tax or tax paid with the return. Your share of these payments is found by using the same formula used in determining your separate tax liability. Substitute the joint estimated tax, or tax paid with the return, for the tax in step (5). If the original return for the carryback year resulted in an overpayment, reduce your contribution by your share of the refund. Attach a copy of the computation to your amended return or application for tentative refund. Credit Ordering Rule General business credits reported on Form 3800 are treated as used on a first-in, first-out basis by offsetting the earliest-earned credits first. Therefore, the order in which the credits are used in any tax year is: Carryforwards to that year, the earliest ones first; The general business credit earned in that year; and The carryback to that year. If your general business credits exceed your tax liability limit, the credits are used in the following order and based on the order shown under Order in which credits are used next. Credits reported on line 2 of all Parts III with boxes A, B, C, and D checked. Credits reported on Part II, line 25. Non-ESBC credits reported on line 5 of all Parts III with boxes A, B, C, and D checked. ESBC credits reported on line 6 of all Parts III with box G checked. Order in which credits are used. When relevant, the components of the general business credit reported on Form 3800 arising in a single tax year are used in the following order. Investment credit (in the following orderrehabilitation credit, energy credit, qualifying advanced coal project credit, qualifying gasification project credit, and qualifying advanced energy project credit) (Form 3468). Qualifying therapeutic discovery project credit (carryforward only). Work opportunity credit (Form 5884). Biofuel producer credit (Form 6478). Credit for increasing research activities (Form 6765). Low-income housing credit (Form 8586, Part I only). Disabled access credit (Form 8826). Renewable electricity, refined coal, and Indian coal production credit (Form 8835). Empowerment zone employment credit (Form 8844). Renewal community employment credit (carryforward only). Indian employment credit (Form 8845). Employer social security and Medicare taxes paid on certain employee tips (Form 8846). Orphan drug credit (Form 8820). New markets credit (Form 8874). Credit for small employer pension plan startup costs (Form 8881). Credit for employer-provided child care facilities and services (Form 8882). Qualified railroad track maintenance credit (Form 8900). Biodiesel and renewable diesel fuels credit (Form 8864). Low sulfur diesel fuel production credit (Form 8896). Distilled spirits credit (Form 8906). Nonconventional source fuel credit. Energy efficient home credit (Form 8908). Energy efficient appliance credit. Alternative motor vehicle credit (Form 8910). Alternative fuel vehicle refueling property credit (Form 8911). Mine rescue team training credit (Form 8923). Agricultural chemicals security credit (carryforward only). Credit for employer differential wage payments (Form 8932). Carbon dioxide sequestration credit (Form 8933). Qualified plug-in electric drive motor vehicle credit (Form 8936). Qualified plug-in electric vehicle credit (carryforward only). Credit for small employer health insurance premiums (Form 8941). New hire retention credit (carryforward only). General credits from an electing large partnership (Schedule K-1 (Form 1065-B)). Although these credits are aggregated on Form 3800, keep a separate record of each credit, including whether the credit was an eligible small business credit, to ensure proper accounting of the credits. TIP Specific Instructions Complete and attach the appropriate credit forms used to figure your current year credit. See exceptions under General Instructions, earlier. -2- Assembling Form 3800. To ensure Form 3800 is correctly processed, assemble Form 3800 in the following order. 1. Page 1. 2. Page 2. 3. Part III with box I checked. 4. All Parts III with box A checked. 5. All Parts III with box B checked. 6. Part III with box C checked. 7. Part III with box D checked. 8. Part III with box G checked. Part I. Current Year Credit for Credits Not Allowed Against Tentative Minimum Tax (TMT) Complete all Parts III before completing Part I and Part II. See CAUTION Part III. General Business Credits or Eligible Small Business Credits for more information. ! Line 3 Enter the applicable passive activity credit amount allowed from Form 8582-CR, Passive Activity Credit Limitations, or Form 8810, Corporate Passive Activity Loss and Credit Limitations. The passive activity credit amount allowed on Part I, line 3, only applies to the general business credits not allowed against TMT from Part I, line 2, plus any prior year unallowed passive activity credit from general business credits not allowed against TMT. If no credits allowed, enter zero on line 3. Passive activity. Generally, a passive activity is a trade or business in which you didn't materially participate. Generally, rental activities are passive activities, whether or not you materially participated. See Form 8582-CR or Form 8810 for details. Line 4 Enter the amount of all carryforwards to 2015 of unused credits that are reported from line 2 of Part III with box C checked. Required statement. For each credit, attach a statement with the following information. Show the tax year the credit originated, the amount of the credit as reported on the original return, and the amount allowed for that year. Also state whether the total carryforward amount was changed from the originally reported amount and identify the type of credit(s) involved. If the revised carryforward amount relates to unused additional research credits, attach an additional statement detailing the changes to the originally reported Form 6765 Instructions for Form 3800 (2015) information for all originating credit years applicable. For each carryback year, show the year and the amount of the credit allowed after you applied the carryback. For each carryforward year, show the year and the amount of the credit carryforward allowed for that year. Note. Individuals claiming the research credit from a sole proprietorship or pass-through entity don't include any carryforward of that credit on Part I, line 4, before figuring the limitation on Part III, line 1c. Include the carryforward when figuring the research credit limitation on line 1c of any Parts III with the applicable box A or B checked. Then include the allowable carryforward amount on Part I, line 4, and attach the statement required above. Line 5 Use Part I, line 5, only when you amend your 2015 return to carry back unused credits from 2016. Enter the amount that is reported from line 2 of Part III with box D checked. Note. Individuals claiming the research credit from a sole proprietorship or pass-through entity don't include any carryback of that credit on Part I, line 5, before figuring the limitation on Part III, line 1c. Include the carryback when figuring the research credit limitation on line 1c of any Parts III with the applicable box A or B checked. Then include the allowable carryback amount on Part I, line 5. See the instructions for Part I, line 4, for the required statement that must be attached to your tax return. Part II. Allowable Credit Line 10b Enter the total allowable credit, if any, from your tax return as follows. Individuals. The amount from Form 1040, lines 49 through 54 (Form 1040NR, lines 47 through 51). Don't include any general business credit claimed on Form 3800, any prior year minimum tax, or any credit claimed on Form 8912, Credit to Holders of Tax Credit Bonds. Estates and trusts. Enter the total of any write-in credits from Form 1041, Schedule G, line 2e. Corporations. Enter the amount from Form 1120, Schedule J, Part I, line 5b (or the applicable line of your return). Line 13 See section 38(c)(6) for special rules that apply to married couples filing separate returns, controlled corporate groups, regulated investment companies, real estate investment trusts, estates, and trusts. Instructions for Form 3800 (2015) Line 17 C Corporations. If the corporation has undergone a post-1986 ownership change (as defined in section 382(g)), section 383 may limit the amount of tax that may be offset by pre-change general business credits. Also, if a corporation acquires control of another corporation (or acquires its assets in a reorganization), section 384 may limit the amount of tax attributable to recognized built-in gains that may be offset by pre-acquisition general business credits. If either of these limitations apply, attach a computation of the allowable general business credit, enter the amount on Part II, line 17, and write \"Sec. 383\" or \"Sec. 384\" in the margin next to your entry on Part II, line 17. Line 18 Complete Part II, lines 18 through 26, if any of the following apply. An amount is entered for the empowerment zone employment credit on line 3 of Part(s) III with box A, B, C, or D checked. An amount is entered for the renewal community employment credit on line 3 of Part III with box C checked. If you have prior year unallowed passive activity credit carryover for the empowerment zone or renewal community employment credit. If any of the above apply, multiply Part II, line 14, by 75% (.75). All others, skip Part II, lines 18 through 25, and enter zero on Part II, line 26. Line 24 Enter the applicable passive activity credit amount for the empowerment zone and renewal community employment credit allowed from Form 8582-CR or Form 8810. The passive activity credit amount allowed on Part II, line 24, only applies to the empowerment zone and renewal community employment credit reported on Part III, line 3, plus any prior year unallowed passive activity empowerment zone and renewal community employment credit. See the instructions for the applicable form for details. If no credits allowed, enter zero on line 24. See the instructions for Part I, line 3, for the definition of a passive activity. Line 33 Enter the applicable passive activity credit amount for general business credits allowed against TMT and eligible small business credits allowed from Form 8582-CR or Form 8810. See the instructions for the applicable form for details. The passive activity credit amount allowed on Part II, line 33, only applies to -3- the general business credits from Part II, line 32, plus any prior year unallowed passive activity credit from general business credits reported on Part III, line 4, and eligible small business credit. If no credits allowed, enter zero on line 33. See the instructions for Part I, line 3, for the definition of a passive activity. Line 34 Enter the amount of all carryforwards to 2015 of unused credits that are reported from line 5 of Part III with box C checked and line 6 of Part III with box G checked. Note. Individuals claiming the research credit from a sole proprietorship or pass-through entity don't include any carryforward of that credit on Part II, line 34, before figuring the limitation on Part III, line 1c. Include the carryforward when figuring the research credit limitation on line 1c of any Parts III with the applicable box A or B checked. Then include the allowable carryforward amount on Part II, line 34. See the instructions for Part I, line 4, for the required statement that must be attached to your tax return. Line 35 Use Part II, line 35, only when you amend your 2015 return to carry back unused credits from 2016. Enter the amount that is reported from line 5 of Part III with box D checked. Note. Individuals claiming the research credit from a sole proprietorship or pass-through entity don't include any carryback of that credit on Part II, line 35, before figuring the limitation on Part III, line 1c. Include the carryback when figuring the research credit limitation on line 1c of any Parts III with the applicable box A or B checked. Then include the allowable carryback amount on Part II, line 35. See the instructions for Part I, line 4, for the required statement that must be attached to your tax return. Line 38 If Part II, line 38, is smaller than the sum of Part I, line 6, and Part II, lines 25 and 36, see Carryback and Carryforward of Unused Credit, earlier. Part III. General Business Credits or Eligible Small Business Credits Complete a separate Part III for each box checked. In addition, for each box A or B checked, if you have a credit from more than one source and one of the sources is a pass-through entity, including a cooperative (see Column (b), later), a separate Part III is needed for each pass-through entity for which you received the same credit. As a result, one checkbox could have multiple Parts III if you receive a single credit from multiple pass-through entities. ! CAUTION After you have completed all necessary Parts III, complete Part I, if necessary, then Part II. Box A Through D and G Check the box that identifies the credit being reported. Box I Check box I if you are reporting credits on more than one Part III with box A or B checked. You must use a Part III with box I checked to consolidate the amounts from all Parts III with box A or B checked. Consolidate the Parts III with box A or B checked by combining the amounts for each credit line on each Part III with box A or B checked; then, enter the total for each credit on the applicable line of the Part III with box I checked. A consolidated Part III is only needed when there is more than one Part III with box A or B checked. More than one box A or B means more than one individual letter box (for example, if there is more than one Parts III with box B checked, a consolidated Part III is needed to reflect the total of all the boxes B checked) or more than one combination of letters (for example, if there is a box A checked and a box B checked, a consolidated Part III is needed to reflect the total of boxes A and B). Column (b) If you are reporting a credit from a pass-through entity, you must enter that pass-through entity's employer identification number (EIN) under column (b) for that credit. If you are reporting a credit reported to you on Form 1099-PATR, Taxable Distributions Received From Cooperatives, you must enter that cooperative's EIN under column (b) for that credit. A separate Part III will be needed to report the EIN of the pass-through entity, including cooperatives, and the amount of credit from that entity, if a credit is received from more than one source and one of the sources is a pass-through entity, including a cooperative. Column (b) is only completed for any Part III with box A or B checked. TIP Don't enter an EIN under column (b) when completing Part III with box C, D, or G checked. Limitation on Certain Credits The aggregate amount from each credit form is usually reported on the appropriate line of Form 3800, Part III, for the applicable boxes A and B, to reflect self-generated credit sources and all pass-through entity sources. However, certain credits have limitations imposed. They include: Form 3468, Part III, line 12p - $4,000 limitation for qualified small wind energy property (reported on Part III, line 4a); Form 8826, line 8 - $5,000 limitation for the overall credit (reported on Part III, line 1e); Form 8881, line 5 - $500 limitation for the overall credit (reported on Part III, line 1j); and Form 8882, line 7 - $150,000 limitation for the overall credit (reported on Part III, line 1k). In situations where there is a limitation on the credit amount, the limited amount allowed is allocated pro rata and anything above the limitation is lost. Lines 1a and 4a If you are a cooperative described in section 1381(a), you must allocate to your patrons the investment credit in excess of your tax liability limit. Allocate to your patrons the portion, if any, of the investment credit on Part I, line 6, or Part II, line 36, in excess of Part II, line 16 or line 29, respectively. While any excess is allocated to patrons, any credit recapture applies as if you as the cooperative had claimed the entire credit. Note. Any carryforward of the qualifying therapeutic discovery project credit may be claimed on Part III, line 1a. Line 1c Research credit limitation. If you are an individual, the amount of the research credit that may be included on Part III, line 1c, is limited to the amount of tax attributable to your taxable income from the sole proprietorship or your interest in the pass-through entity (partnership, S corporation, estate, or trust) generating the credit. Figure the research credit limitation separately for each sole proprietorship or pass-through entity by using the following formula. Taxable income attributable to the sole proprietorship or your interest in the pass-through entity Line 11 Your taxable income for the year The sum of the fractions used for determining the limits can't exceed one. The research credit used to determine the limitation is the sum of the current year credit (determined without regard to the limitation), any carryforwards of the credit not used in prior years, and any carryback of the credit from 2016. For information on -4- how to figure your taxable income for the year, your taxable income attributable to the sole proprietorship, or your interest in the pass-through entity, see Regulations sections 1.41-7(c) and 1.53-3. If in the current tax year you had no taxable income attributable to a particular business interest, you can't claim any research credit this year related to that business. If any of your research credit isn't allowed to be used because of this limitation, see Carryback and Carryforward of Unused Credit, earlier. Line 1e When reporting the disabled access credit from Form 8826 on Part III, line 1e, don't enter more than $5,000 in column (c) of Parts III with box A or B checked, combined. Line 1f Cooperatives, estates, and trusts: enter the amount from Form 8835, Part I, line 12, and the applicable part of the amount from Form 8835, Part II, line 32. All others: enter the amount from Form 8835, Part I, line 10, and the applicable part of the amount from Form 8835, Part II, line 30. Don't enter an amount from Form 8835 that is included on Form 3800, Part III, line 4e. Line 1j When reporting the credit for small employer pension plan startup costs from Form 8881 on Part III, line 1j, don't enter more than $500 in column (c) of Parts III with box A or B checked, combined. Line 1k When reporting the credit for employer-provided childcare facilities and services from Form 8882 on Part III, line 1k, don't enter more than $150,000 in column (c) of Parts III with box A or B checked, combined. Line 1v Only the carryforward of the agricultural chemicals security credit from Form 8931 can be reported on Part III, line 1v. Line 1z Only the carryforward of the qualified plug-in electric vehicle credit claimed in Part I, Section B, of 2009 through 2012 Form 8834 can be reported on Part III, line 1z. Line 1bb Enter the total of the amounts shown in box 7 of the Schedules K-1 (Form 1065-B), Partner's Share of Income (Loss) From an Electing Large Partnership, you received from electing large partnerships (ELPs). Instructions for Form 3800 (2015) Line 1zz Enter any carryforward to 2015 of any unused credit from: Form 3468 (for years prior to 2008 for the rehabilitation credit) (for tax years beginning before October 4, 2008, for the energy credit); Form 5884 for years prior to 2007; Form 6478 for years prior to 2005; Form 8846 for years prior to 2007; or Form 8900 for years prior to 2008. Also use Part III, line 1zz, to enter any carryforward to 2015 of any unused credit from general business credits no longer covered on Form 3800 due to, and not limited to, expiration of a tax provision. The following list identifies these credits. Trans-Alaska pipeline liability fund credit. Credit for employers affected by Hurricane Katrina, Rita, or Wilma (Form 5884-A, Section A only). Hurricane Katrina housing credit (Form 5884-A, Section B only). Credit for affected Midwestern disaster area employers (Form 5884-A, Section A only). Employer housing credit (Form 5884-A, Section B only). Enhanced oil recovery credit (Form 8830). Credit for contributions to selected community development corporations (Form 8847). Welfare-to-work credit (Form 8861). New York Liberty Zone business employee credit (Form 8884). Only Part III with box C checked is to be used with a Part III, line 1zz, credit entry under column (c). No EINs are required under column (b). Instructions for Form 3800 (2015) Note. If an amount is entered on Part III, line 1zz, see the instructions for Part I, line 4, for the statement to attach. Line 3 Include any carryforward of the renewal community employment credit on Part III, line 3. Line 4h Credit for Small Employer Health Insurance Premiums (Form 8941): Tax-exempt eligible small employers, other than certain farmers' cooperatives, don't report the credit for small employer health insurance premiums on Part III, line 4h. Eligible tax-exempt small employers will report this credit on Form 990-T, Exempt Organization Business Income Tax Return. If your only source of credit listed on Part III, line 4h, is from pass-through entities, you aren't required to complete or attach Form 8941. Instead, enter the credit directly on Part III, line 4h. Eligible small employers (other than tax-exempt eligible small employers) will enter the credit from Form 8941, line 16 or line 18. See the Instructions for Form 8941 for more information. Line 4z This line is for future use only. Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to -5- allow us to figure and collect the right amount of tax. You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by Internal Revenue Code section 6103. The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden for individual taxpayers filing this form is approved under OMB control number 1545-0074 and is included in the estimates shown in the instructions for their individual income tax return. The estimated burden for all other taxpayers who file this form is shown below. Recordkeeping . . . . . . . 30 hr., 51 min. Learning about the law or the form . . . . . . . 1 hr. Preparing and sending the form to the IRS . . . . 1 hr., 32 min. If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be happy to hear from you. See the instructions for the tax return with which this form is filed. 2015 Instructions for Form 5884 Department of the Treasury Internal Revenue Service Work Opportunity Credit Section references are to the Internal Revenue Code unless otherwise noted. Future Developments For the latest information about developments related to Form 5884 and its instructions, such as legislation enacted after they were published, go to www.irs.gov/form5884. What's New The work opportunity credit has been extended to cover employees who begin work after December 31, 2014, and before January 1, 2020. Empowerment zone designations have been extended to cover 2015 and 2016. The Protecting Americans from Tax Hikes Act of 2015 added a new targeted group for qualified long-term unemployment recipients who begin work after 2015. General Instructions Purpose of Form Use Form 5884 to claim the work opportunity credit for qualified first- and/or second-year wages you paid to or incurred for targeted group employees during the tax year. Your business doesn't have to be located in an empowerment zone or rural renewal county to qualify for this credit. You can claim or elect not to claim the work opportunity credit any time within 3 years from the due date of your return on either your original return or an amended return. Partnerships, S corporations, cooperatives, estates, and trusts must file this form to claim the credit. All other taxpayers aren't required to complete or file this form if their only source for this credit is a partnership, S corporation, cooperative, estate, or trust. Instead, they can report this credit directly on Form 3800, General Business Credit. How To Claim the Credit You must ask for and be issued a certification for each employee from the state employment security agency (SESA). The certification proves that the employee is a member of a targeted group. You must either: Receive the certification by the day the individual begins work; or Complete Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, on or before the day you offer the individual a job and receive the certification before you claim the credit. If you complete Form 8850, it generally must be signed by you and the individual and submitted to the SESA of the state in which your business is located (where the employee works) by the 28th calendar day after the Jan 14, 2016 individual begins work. However, because the credit expired at the end of 2014 and was retroactively extended on December 18, 2015, you may be allowed more time to submit Form 8850 for an individual who began work while the credit was expired or for a reasonable time after it was extended. We will update www.irs.gov/form5884 as this and any other additional information, including information on the availability of the credit for long-term unemployed individuals, becomes available. If the SESA denies the request, it will provide a written explanation of the reason for denial. If a certification is revoked because it was based on false information provided by the worker, wages paid or incurred after the date you receive the notice of revocation don't qualify for the credit. Targeted group employee. An employee is a member of a targeted group if he or she began working for you before 2020 and is a: Long-term family assistance recipient, Qualified recipient of Temporary Assistance for Needy Families (TANF), Qualified veteran, Qualified ex-felon, Designated community resident, Vocational rehabilitation referral, Summer youth employee, Supplemental Nutrition Assistance Program (SNAP) benefits (food stamps) recipient, SSI recipient, or Qualified long-term unemployment recipient (for individuals who begin work after 2015). See the Instructions for Form 8850 and section 51(d) for details and restrictions. Qualified Wages Wages qualifying for the credit have the same meaning as wages subject to the Federal Unemployment Tax Act (FUTA) (determined without regard to the $7,000 FUTA tax wage base). If the work performed by any employee during more than half of any pay period qualifies under FUTA as agricultural labor, that employee's wages subject to social security and Medicare taxes are qualified wages. For a special rule that applies to railroad employees, see section 51(h)(1)(B). Qualified wages for any employee must be reduced by the amount of any work supplementation payments you received under the Social Security Act for the employee. The amount of qualified wages for any employee is zero if: The employee didn't work for you for at least 120 hours, The employee worked for you previously, The employee is your dependent, The employee is related to you (see section 51(i)(1)), or Cat. No. 13571O $12,000 for a qualified veteran certified as being entitled to compensation for a service-connected disability and hired not more than 1 year after being discharged or released from active duty in the U.S. Armed Forces. $14,000 for a qualified veteran certified as being unemployed for a period or periods totaling at least 6 months (whether or not consecutive) in the 1-year period ending on the hiring date. $24,000 for a qualified veteran certified as being entitled to compensation for a service-connected disability, and unemployed for a period or periods totaling at least 6 months (whether or not consecutive), in the 1-year period ending on the hiring date. 50% or less of the wages the employee received from you were for working in your trade or business. Qualified wages do not include: Wages paid to or incurred for any employee during any period for which you received payment for the employee from a federally funded on-the-job training program; Wages paid to or incurred for a summer youth employee for services performed while the employee lived outside an empowerment zone; Wages paid to or incurred for a designated community resident for services performed while the employee lived outside an empowerment zone or rural renewal county; Wages paid to or incurred for services performed by a summer youth employee before or after any 90-day period between May 1 and September 15; and Wages for services of replacement workers during a strike or lockout. The amount of qualified first-year wages that may be taken into account for any employee certified as a summer youth employee is limited to $3,000. The amount of qualified first-year wages that may be taken into account for an employee certified as a member of any other targeted group is $6,000. Member of Controlled Group or Business Under Common Control Successor employer. For successor employers, the 1or 2-year period begins on the date the employee began work for the previous employer and any qualified first- or second-year wages paid or incurred by the successor employer are reduced by the qualified first- or second-year wages paid or incurred by the previous employer. See section 51(k)(1) and Regulations section 1.51-1(h). A successor employer is an employer that acquires substantially all of the property used in a trade or business (or a separate unit thereof) of another employer (the previous employer) and immediately after the acquisition, the successor employs in his or her trade or business an individual who was employed immediately prior to the acquisition in the trade or business of the previous employer. For purposes of figuring the credit, all members of a controlled group of corporations (as defined in section 52(a)) and all members of a group of businesses under common control (as defined in section 52(b)), are treated as a single taxpayer. As a member, figure your credit based on your proportionate share of qualified wages giving rise to the group's work opportunity credit. Enter your share of the credit on line 2. Attach a statement showing how your share of the credit was figured, and enter \"See attached\" next to the entry space for line 2. Specific Instructions Current Year Credit Lines 1a, 1b, and 1c Line 2 Enter on the applicable line and multiply by the percentage shown the total qualified first- or second-year wages paid to or incurred for employees who are members of a targeted group. Qualified first-year wages are qualified wages you paid to or incurred for work performed during the 1-year period beginning on the date the individual begins work for you. Qualified second-year wages are qualified wages you paid to or incurred for certified long-term family assistance recipients for work performed during the 1-year period beginning on the day after the last day of the 1-year wage period. In general, you must reduce your deduction for salaries and wages by the amount on line 2. This is required even if you can't take the full credit this year and must carry part of it back or forward. If you capitalized any costs on which you figured the credit, reduce the amount capitalized by the credit attributable to these costs. Line 3 Enter total work opportunity credits from: Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc., box 15 (code J); Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc., box 13 (code J); Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc., box 13 (code F); or Form 1099-PATR, Taxable Distributions Received From Cooperatives, box 8, or other notice of credit allocation. The amount of qualified first-year wages and the amount of qualified second-year wages that may be taken into account for any employee certified as a long-term family assistance recipient is limited to $10,000 per year. The amount of qualified first-year wages that may be taken into account for an employee certified as a qualified veteran is limited to the following amounts. $6,000 for a qualified veteran certified as being either (a) a member of a family receiving SNAP assistance (food stamps) for at least a 3-month period during the 15-month period ending on the hiring date, or (b) unemployed for a period or periods totaling at least 4 weeks (whether or not consecutive) but less than 6 months in the 1-year period ending on the hiring date. Partnerships, S corporations, cooperatives, estates, and trusts must always report the above credits on line 3. All other filers figuring a separate credit on earlier lines must also report the above credits on line 3. All others not using earlier lines to figure a separate credit can report the above credits directly on Form 3800, Part III, line 4b. -2- Instructions for Form 5884 (2015) Line 5 laws of the United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax. Cooperatives. A cooperative described in section 1381(a) must allocate to its patrons the credit in excess of its tax liability limit. Therefore, to figure the unused amount of the credit allocated to patrons, the cooperative must first figure its tax liability. While any excess is allocated to patrons, any credit recapture applies as if the cooperative had claimed the entire credit. If the cooperative is subject to the passive activity rules, include on line 3 any Form 5884 credit from passive activities disallowed for prior years and carried forward to this year. Complete Form 8810, Corporate Passive Activity Loss and Credit Limitations, to determine the allowed credit that must be allocated to patrons. For details, see the Instructions for Form 8810. You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103. The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden for individual taxpayers filing this form is approved under OMB control number 1545-0074 and is included in the estimates shown in the instructions for their individual income tax return. The estimated burden for all other taxpayers who file this form is shown below. Estates and trusts. Allocate the work opportunity credit on line 4 between the estate or trust and the beneficiaries in the same proportion as income was allocated and enter the beneficiaries' share on line 5. If the estate or trust is subject to the passive activity rules, include on line 3 any Form 5884 credit from passive activities disallowed for prior years and carried forward to this year. Complete Form 8582-CR, Passive Activity Credit Limitations, to determine the allowed credit that must be allocated between the estate or trust and the beneficiaries. For details, see the Instructions for Form 8582-CR. Recordkeeping . . . . . . . . . . . . . . . . . . . . . . Learning about the law or the form . . . . . . . . . Preparing and sending the form to the IRS . . . 6 min. 15 min. 34 min. If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be happy to hear from you. See the instructions for the tax return with which this form is filed. Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue Instructions for Form 5884 (2015) 3 hr., 1 hr., 2 hr., -3- I. Title: Preparation of a Corporate Income Tax Return Using IRS Form 1120 II. Introduction: In prior learning demonstrations, you conducted tax research and prepared the 20X5 Form 1040 for Jerome and Debra Horowitz, one of the firm's clients for many years. Given your outstanding performance conducting research and preparing the Horowitz's tax return, your boss promoted you to the corporate income tax preparation department. Given your professional goal is to become a senior partner of the firm someday, moving up to the corporate tax department is right in sync with your career aspirations. This hypothetical tax case includes one (1) main activity: ! Preparing a federal corporate income tax return using IRS Form 1120. Throughout this learning demonstration, your professor will play the role of a senior partner in the taxation department with whom you discuss various issues and submit draft documents for approval in advance of communicating with clients. To successfully complete this Learning Demonstration, you must demonstrate your knowledge of and abilities to complete the following goals and competencies: Goal 1: Communication: Learners demonstrate ability to communicate clearly both orally and in writing. o Competencies: ! 1.1 Organize document or presentation clearly in a manner that promotes understanding ! 1.2 Develop coherent paragraphs or points so that each is internally unified and so that each functions as part of the whole document or presentation ! 1.3 Provide sufficient, correctly cited support that substantiates the writer's ideas ! 1.4 Tailor communications to the audience ! 1.5 Use sentence structure appropriate to the task, message and audience ! 1.6 Follow conventions of Standard Written English Goal 2: Critical Thinking: Learners demonstrate ability to apply logical, systematic decision-making processes to formulate clear, defensible ideas and to draw ethical conclusions. o Competencies: ! 2.1 Articulate and frame the issue ! 2.2 Collect and evaluate information ! 2.3 Evaluate the underlying causes or conditions of elements contributing to an issue ! 2.4 Use systems thinking to arrive at a decision in the context of an issue ! 2.5 Apply ethical principles when determining actions. Goal 3: Quantitative Reasoning: Learners demonstrate the ability to use mathematical operations and analytical concepts and operations to address problems and to inform decision-making o Competency ! 3.1 Construct models that represent real-world problems or processes ! 3.2 Develop visible representation of data ! 3.3 Analyze data using mathematical/algebraic operations ! 3.4 Use calculated results to inform the problem or process Goal 4: Leadership, Facilitation, and Collaboration: Learners lead, facilitate, and collaborate with a variety of individuals and diverse teams to achieve organizational objectives. o Competency ! 4.1 Demonstrate an ability to plan a particular objective or goal Goal 8: Technical Competencies in Federal Taxation of Individuals, Partnerships, Corporations, and Other Entities: learners demonstrate an applied understanding of tax accounting and federal taxation law by conducting tax research, preparing individual and corporate tax returns, and simulating tax audits. Learners apply competencies via contextualized learning demonstrations to perform authentic professional tasks in federal income taxation. o Competency ! 8.1 Legal and regulatory: Students demonstrate a general understanding of the Internal Revenue Code. ! 8.2 Professional research: learners demonstrate an applied understanding of how to conduct taxation research based on statutory, regulatory, and common-law rules. ! 8.3 Measurement and reporting: learners demonstrate an applied understanding of applicable income taxation laws to prepare tax returns for individuals, corporations, and or other entities. ! 8.4 Decision Making: Apply tax laws, regulations, and court cases to individual situations, identifying and communicating planning opportunities and compliance needs. MIKE'S SPORTING GOODS, INC. A "C" CORPORATION 1120 RETURN PROJECT As the newest member on the corporate tax department team, the senior partner assigns you to prepare corporate tax returns for Mike's Sporting Goods, Inc. Mike's Sporting Goods, Inc., is a Maryland C-Corporation that sells athletic shoes and clothing to sports teams at the college level. The company was originally started by Mike Jones and three guys he met while attending UMUC, all of whom were state champions in various sports. Juan Delaross was a swimmer who won the state championship with his killer butterfly stroke in the 100-meter fly. Elroy Mulcane was the college champion in golf and Scott Barnett was the state cycling champion three years in a row. Mike won the state championship as a sprinter all four years of college. Starting the company was Mike's idea, he owns the largest percentage of stock, and is the only owner who works in the business. The other three investors brought money to the table, but never planned on working in the sporting goods store. Therefore, no one questioned Mike when he suggested naming the corporation Mike's Sporting Goods, Inc. In addition, Mike has always had a strong desire to be known as the big guy on campus even after graduation. Location As the old saying goes, Location, location, location. Luckily, Juan is a commercial real estate broker with a reputation for finding the perfect location for small businesses. After showing the location to the other investors, everyone agreed it would attract their target market of young athletic enthusiasts. As corporate officers, Mike and Juan signed a ten-year lease that required $9,200 per year in rent. The building was built just a few years ago, so minimal expense was projected for maintenance and repairs. In 20Y5, Mike kept repairs expense down to $800, which really pleased Juan, Elroy, and Scott. Corporate investments During 20Y5, Mike's Sporting Goods, Inc. received the following investment incomes: ! ! ! ! Interest from its own Accounts Receivables = $1,500 Interest from corporate bonds = $4,000 Interest from tax-exempt state bonds = $5,000 Dividends from various U.S. corporations = $10,000 o Mike's Sporting Goods, Inc. owns 20% of the stock of one corporation Since Mike's Sporting Goods, Inc. did not have a net operating loss, its only entry on line 29 is the dividends-received deduction of $8,000 from Schedule C, page 2. Year-end 20Y5, includes a $3,600 capital losses from the sale of securities. Revenue from Sales The corporation, which uses an accrual basis of accounting on a calendar year, brought in $2,910,000 in gross sales in 20Y5. Just less than 1% of gross sales were returned, thus bringing net sales to $2,890,000. Thanks to Mike's purchasing savvy, cost of goods sold was $2,050,000, which is less than the industry standard of 80% of sales. Other Expenses: Advertising While the stockholder's had intended on spending more on advertising, Mike only spent $8,700 and most of it was in Website development. Bad debt expense The corporation uses the specific account write off method for uncollectible accounts receivable. A total of $1,600 in accounts receivable were written off in 20Y5. Charitable contributions During the year, Mike's Sporting Goods, Inc. contributed $11,400 to the UMUC Traveling Athletes Fund and $12,600 to the UMUC Athletic Scholarship Fund. Depreciation On Line 8(a) of the Schedule M of the 1120, Mike's Sporting Goods, Inc. reports the difference between the depreciation claimed on the tax return and the depreciation shown on the corporation's books. Total depreciation from Form 4562 (not illustrated) is $17,600. $12,400 is included as cost of goods sold in Line 5 of the Form 1125-A. Enter the balance of $5,200 on line 20. Book Depreciation is $15,980. Interest expense: Mike's Sporting Goods, Inc. incurs interest expense on debt to finance operations and to buy investments when a deal is just too good to pass up. Elroy is a securities broker with a national brokerage firm, therefore he handles all corporate investments. In 20Y5, the corporation accrued $27,200 in interest expense plus $850 in interest on notes used to carry tax-exempt state bonds. Salaries When the corporation was first formed, the four corporate officers agreed to keep their salaries low for the first five years to allow the business to grow. Thus, they agreed to pay Mike $55,000 per year, since he will manage the store, and $5,000 per year to the other stockholders. Thereby, total officers salaries will be $70,000 per year for the first five years. Hint: use Schedule E. Since Mike will be handling the ordering, inventory management, and other administrative tasks, all employees will be in sales. Given the nature of sporting goods stores, everyone agreed the staff should be college students currently attending UMUC. Their goal was to keep wages below $50,000 per year. In 20Y5, Mike managed to keep total wages at $44,000. All other expenses All other expenses of operating Mike's Sporting Goods, Inc. totals $78,300. These expenses include legal fees, office expenses, and sales commissions. Attach a schedule that itemizes these expenses to the return. Taxes and credits Taxes: At December 31