For book purposes: The corporation uses straight-line depreciation over the useful lives of assets as follows: store building, 50 years; equipment, ten years; and trucks, five years. The corporation takes a half-year's depreciation in the year of acquisition and the year of disposition and assumes no salvage value. The book financial statements in Tables C:3-3 and C:3-4 reflect these calculations. For tax purposes: All assets are MACRS property as follows: store building, 39-year nonresi-dential real property; equipment, seven-year property; and trucks, five-year property. The corporation acquired the store building for $2 million and placed it in service on January 2, 2018. The corporation acquired two pieces of equipment for $250,000 (Equipment 1) and $500,000 (Equipment 2) and placed them in service on January 2, 2018. The corpora-tion acquired the trucks for $100,000 and placed them in service on July 18, 2019. The trucks are not listed property and are not subject to the limitation on luxury automobiles.

The corporation did not make the expensing election under Sec. 179 or take bonus deprecia-tion on any property acquired before 2021. Accumulated tax depreciation through Decem-ber 31, 2020, on these properties is as follows: Store building $ 151,780 Equipment 1 140,675 Equipment 2 281,350 Trucks 52,000 On October 16, 2021, the corporation sold for $280,000 Equipment 1 that originally cost $250,000 on January 2, 2018. The corporation had no Sec. 1231 losses from prior years. In a separate transaction on October 17, 2021, the corporation acquired and placed in service a piece of equipment costing $600,000. Assume these two transactions do not qualify as a like-kind exchange. The new equipment is seven-year property. The corpora-tion made the Sec. 179 expensing election with regard to the new equipment for the entire cost of this property. Where applicable, use published IRS depreciation tables to compute 2021 depreciation (reproduced in Appendix C of this text)

Other Information: Ignore the accumulated earnings tax. The corporation received dividends (see Income Statement in Table C:3-4) from tax-able, domestic corporations, the stock of which Melodic Musical Sales, Inc. owns less than 20%. The corporation paid $100,000 in cash dividends to its shareholders during the year and charged the payment directly to retained earnings. The state income tax in Table C:3-4 is the exact amount of such taxes incurred during the year. The corporation is not entitled any credits. Ignore the financial statement impact of any underpayment penalties incurred on the tax return. Required: Prepare the 2021 corporate tax return for Melodic Musical Sales, Inc. along with any necessary supporting schedules. Optional: Prepare both Schedule M-3 (but omit Schedule B and Form 8916-A) and Sched-ule M-1 even though the IRS does not require both Schedule M-1 and Schedule M-3. Note to Instructor: See solution in the Instructor's Resource Manual for other optional information to provide to students.