Here are the guidelines for the project:

• Based on the given information (Links to an external site.)
•  prepare the 2018 Form 1120 for Bizrate Electronics with the accompanying Schedule D, 1125-A, 1125-E, and Form 4797. Also, provide calculations for Jon and Billy's basis in Bizrate's stock and Bizrate basis in the new assets it holds. Depreciation will be a given number. Your basis calculations in addition to the Tax Return are due in Week 8.
• Your team will create a presentation that supports the calculations and research completed during the project covered in all applicable COs.
• The PowerPoint must be at least 7 slides long properly formatted using APA citations where appropriate.
• Your grade will be based on the group tax return and group PowerPoint presentation.
• If you are taking this class online, your presentation will be narrated via PowerPoint by your group. If you are taking this class on-campus, your presentation will be live in class Week 8

Bizrate Electronics, Inc.

A "C" Corporation

For the Year Ended December 31, 2018

               Bizrate Electronics was organized on February 22, 2018, by Jon Jones and Billy Burt. Jon contributed $270,000 cash and SBUX stock (acquired 01/01/2017) worth $30,000 for 60% of Bizrate stock, while Billy contributed $200,000 cash for 40% of the stock. Jon's social security number is 123-45-6789 and Billy's is 987-65-4321. Bizrate's employer ID number is 12-3456789. Bizrate began business on March 1, 2018. Bizrate is a retail electronics outlet located at 118812 Josey Lane, Louisville, KY 40018. Bizrate uses the accrual method of accounting, the first-in, first-out (FIFO) inventory method, and a calendar year. 

               Bizrate's 2018 income statement, balance sheet, and statement of changes in retained earnings are on the following pages..

               

Bizrate Electronics, Inc.

Income Statement

For the Year Ended December 31, 2018

Sales

 

4,700,000

 

Returns and Allowances

          (50,000)

 

 

4,650,000

Beginning Inventory

 

0

Purchases

 

4,050,000

 

 

4,050,000

Ending Inventory

 

(1,700,000)

(2,350,000)

Gross Profit

 

2,300,000

Expenses

 

 

Salaries (a)

980,000

 

Depreciation (b)

75,400

 

Advertising

30,000

 

Bad Debts

39,000

 

Rent

100,000

 

Interest (c)

39,500

 

Utilities

38,300

 

Delivery Expense

34,900

 

Office Supplies

46,200

 

Repairs and Maintenance

29,000

 

Organization Expense (d)

6,000

 

Meals and Entertainment

80,000

 

Insurance Expense (e)

36,000

 

Payroll Taxes

113,300

 

2018 Federal Income Tax Deposits

250,000

 

Other Taxes

20,000

 

Fines and Penalties (Traffic)

1,000

 

Accounting and Legal

12,000

 

Charitable Contributions - Red Cross

18,000

 

Real Estate Taxes on Investment Land

800

1,949,400

 

 

350,600

Other Income

 

 

Gain on Sale of Stock (f)

4,000

 

Sale of Delivery Truck (g)

8,600

 

Interest on County Tax Exempt Bonds

1,100

 

Interest on CDs

11,500

 

Dividends from US Corporations (h)

5,600

30,800

Net Income

 

381,400

Bizrate Electronics, Inc.

Notes to Income Statement

a.      Includes salaries: Jon Jones $200,000, Billy Burt $50,000.

b.      Depreciation for tax purposes $112,700.

c.      $2,500 is allocable to the investments in stock. The remainder is related to Bizrate's business.

d.      $6,000 in fees were incurred in organizing Bizrate.

e.      Includes $5,000 of premiums for term life insurance on Jon and Billy. Bizrate is the beneficiary of these policies. In addition, $4,300 of the health insurance premiums are attributable to coverage for Jon and his family, and $3,900 are attributable to coverage for Billy and his family.

f.       Sold 500 shares of SBUX stock for $35,000 on December 1, 2018. The stock had been purchased by Jon on July 1, 2004 for $20,000 and was contributed by him on February 22, 2018, when it was worth $30,000. Also, on December 1, 2018 sold 100 shares of Grand View, Inc. for $2,000. The stock had been purchased on March 1, 2018 for $3,000. At no time did Bizrate own more than 1% of the outstanding stock of these corporations.

g.      Sold a delivery truck on September 23, 2018 for $35,000. The Truck had originally been purchased on May 1, 2018 for $33,400. Depreciation taken for book purposes was $7,000. Depreciation taken for tax purposes was $9,350.

h.      Bizrate owns less than 20% of the outstanding stock of each of these corporations.

Bizrate Electronics, Inc.

Balance Sheet

December 31, 2018

Assets

 

 

Cash

113,000

 

Accounts Receivable

            300,000

 

     Less Allowance for Bad Debts

29,000

271,000

 

Inventory

1,700,000

 

Tax Exempt Securities

17,000

 

Other Current Assets

40,000

 

Other Investments

85,000

 

Buildings and Depreciable Assets (net)

165,400

 

Land

70,000

 

      Total Assets

2,461,400

 

 

Liabilities and Equity

 

 

Accounts Payable

375,000

 

Mortgages, Notes Payable in < 1 year

185,000

 

Other Current Liabilities

70,000

 

Mortgages, Notes Payable in > 1 year

1,190,000

 

Capital Stock

500,000

 

Retained Earnings

141,400

 

      Total Liabilities and Equity

2,461,400

 

 

 

 

 

 

 

 

 

 

Bizrate Electronics, Inc.

Statement of Changes in Retained Earnings

For the Year Ended December 31, 2018

Beginning Balance

 

0

 

 

Income

 

381,400

Distributions

 

(240,000)

 

 

Balance, December 31, 2018

 

141,400

 

 

 

 

Other Information

Addresses for the owners are:

               Jon Jones, 3513 Jackson Street, Louisville, KY 40018

               Billy Burt, 2532 Sugarbush, Louisville, KY 40018