Hi,

I need help completing the 2014 S-corp tax filing and any additional forms that may be needed. I have attached a form 1120-S which needs to be properly filled out based on the information found below.

Bottle-Up, Inc., was organized on January 8, 2005, and made its S election on January 24, 2005. The necessary consents to the election were filed in a timely manner. Its address is 1234 Hill Street, City, ST 33333. Bottle-Up uses the calendar year as its tax year, the accrual method of accounting, and the first-in, first-out (FIFO) inventory method. Bottle-Up manufactures ornamental glass bottles. It made no changes to its inventory costing methods this year. It uses the specific identification method for bad debts for book and tax purposes. Herman Hiebert and Melvin Jones own 500 shares each. Both individuals materially participate in Bottle-Up?s single activity. Herman Hiebert is the tax matters person. Financial statements for Bottle-Up for the current year are shown in Tables C:11-2 through C:11-4. Assume that Bottle-Up?s business qualifies as a U.S. production activity and that its qualified production activities income is $90,000. The S corporation uses the small business simplified overall method for reporting these activities (see discussion for Line 12d of Schedules K and K-1 in the Form 1120S instructions). Prepare a 2014 S corporation tax return for Bottle-Up, showing yourself as the paid preparer.

(Problem C:11-63)

Sales$2,500,000

Returns and allowances(15,000)

Net sales$2,485,000

Beginning inventory$ 102,000

Purchases900,000

Labor200,000

Supplies80,000

Utilities100,000

Other manufacturing costs188,000 a

Goods available for sale$1,570,000

Ending inventory(96,000)1,474,000 b

Gross profit$1,011,000

Salariesc$ 451,020

Utilities expense54,000

Depreciation (MACRS depreciation is $36,311)11,782

Automobile and truck expense26,000

Office supplies expense9,602

Advertising expense105,000

Bad debts expense620

Rent expense30,000

Interest expensed1,500

Meals and entertainment expense21,000

Selling expenses100,000

Repairs and maintenance expense38,000

Accounting and legal expense4,500

Charitable contributionse9,000

Insurance expensef24,500

Hourly employees? fringe benefits11,000

Payroll taxes36,980

Other taxes2,500

Penalties (fines for overweight trucks)1,000(938,004)

Operating profit$ 72,996

Other income and losses:

Long-term gain on sale of capital assets

$ 48,666g

Sec. 1231 loss

(1,100)h

Interest on U.S. Treasury bills

1,200

Interest on State of Florida bonds

600

Dividends from domestic corporations

11,600

Investment expenses

(600)60,366

Net income$ 133,362

a Total MACRS depreciation is $74,311. Assume that $38,000 of depreciation has been allocated to cost of sales for both book and tax purposes so that the book and tax inventory and cost of sales amounts are the same. The AMT depreciation adjustment on personal property is $9,000.

b The cost of goods sold amount reflects the Uniform Capitalization Rules of Sec. 263A. The appropriate restatements have been made in prior years.

c Officer salaries of $120,000 are included in the total. All are employer?s W-2 wages.

d Investment interest expense is $500. All other interest expense is trade- or business-related. None of the interest expense relates to the production of tax-exempt income.

e The corporation made all contributions in cash to qualifying charities.

f Includes $3,000 of premiums paid for policies on lives of corporate officers. Bottle-Up is the beneficiary for both policies.

g The corporation acquired the capital assets on March 3, 2012 for $100,000 and sold them on September 15, 2014, for $148,666.

h The corporation acquired the Sec. 1231 property on June 5, 2013 for $10,000 and sold it on December 21, 2014, for $8,900.

TABLE C:11-3 Bottle-Up, Inc. Balance Sheet for January 1 and December 31 of the Current Year (Problem C:11-63)

January 1December 31

Assets:

Cash

$ 15,000$116,948

Accounts receivable

41,50045,180

Inventories

102,00096,000

Stocks

103,00074,000

Treasury bills

15,00016,000

State of Florida bonds

10,00010,000

Building and equipment

374,600375,000

Minus:?Accumulated depreciation

(160,484)(173,100)

Land

160,000190,000

Total

$660,616$750,028

Liabilities and equities:

Accounts payable

$ 36,000$ 10,000

Accrued salaries payable

12,0006,000

Payroll taxes payable

3,4167,106

Sales taxes payable

5,2006,560

Due to Mr. Hiebert

10,0005,000

Mortgage and notes payable (current maturities)

44,00052,000

Long-term debt

210,000260,000

Capital stock

10,00010,000

Retained earnings

330,000393,362

Total

$660,616$750,028

TABLE C:11-4 Bottle-Up, Inc. Statement of Change in Retained Earnings, for the Current Year Ended December 31 (Problem C:11-63)

Balance, January 1$330,000a

Plus: Net income$133,362

Minus: Dividends(70,000)63,362

Balance, December 31$393,362

a The January 1 accumulated adjustments account balance is $274,300.

Required: Prepare the 2014 S corporation tax return (Form 1120S), including the following additional schedules and forms: Schedule D, Form 4562, and Schedule K-1.

Optional: (1) Complete Schedule M-2 in Form 1120S even though the company has never been a C corporation. For this purpose, the accumulated adjustments account at the beginning of 2014 is $171,360. (2) Prepare a schedule for each shareholder?s basis in his or her S corporation stock. For this purpose, Bailey?s stock basis at the beginning of 2014 is $1,251,408 and Firth?s is $2,535,952.

Form 1120S Department of the Treasury Internal Revenue Service U.S. Income Tax Return for an S Corporation OMB No. 1545-0123 Do not file this form unless the corporation has filed or is attaching Form 2553 to elect to be an S corporation. Information about Form 1120S and its separate instructions is at www.irs.gov/form1120s. 2014 For calendar year 2014 or tax year beginning A S election effective date TYPE B Business activity code number (see instructions) OR PRINT , 2014, ending , 20 Name D Employer identification number Number, street, and room or suite no. If a P.O. box, see instructions. E Date incorporated City or town, state or province, country, and ZIP or foreign postal code F Total assets (see instructions) C Check if Sch. M-3 attached $ Yes No If \"Yes,\" attach Form 2553 if not already filed G Is the corporation electing to be an S corporation beginning with this tax year? (4) (3) (5) Name change Address change S election termination or revocation Final return (2) Amended return H Check if: (1) I Enter the number of shareholders who were shareholders during any part of the tax year . . . . . . . . . Caution. Include only trade or business income and expenses on lines 1a through 21. See the instructions for more information. 1a . . . . . . . . . . . . . . 1a . . . . . . . . . . . . . . 1b Balance. Subtract line 1b from line 1a . . . . . . . . . . . . . . . . . . . Cost of goods sold (attach Form 1125-A) . . . . . . . . . . . . . . . . . . Gross profit. Subtract line 2 from line 1c . . . . . . . . . . . . . . . . . . Net gain (loss) from Form 4797, line 17 (attach Form 4797) . . . . . . . . . . . . Other income (loss) (see instructionsattach statement) . . . . . . . . . . . . . Total income (loss). Add lines 3 through 5 . . . . . . . . . . . . . . . . Compensation of officers (see instructionsattach Form 1125-E) . . . . . . . . . . Salaries and wages (less employment credits) . . . . . . . . . . . . . . . . Repairs and maintenance . . . . . . . . . . . . . . . . . . . . . . . Bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . Rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Taxes and licenses . . . . . . . . . . . . . . . . . . . . . . . . . Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . Depreciation not claimed on Form 1125-A or elsewhere on return (attach Form 4562) . . . . Depletion (Do not deduct oil and gas depletion.) . . . . . . . . . . . . . . . Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . Pension, profit-sharing, etc., plans . . . . . . . . . . . . . . . . . . . . Employee benefit programs . . . . . . . . . . . . . . . . . . . . . . Other deductions (attach statement) . . . . . . . . . . . . . . . . . . . Total deductions. Add lines 7 through 19 . . . . . . . . . . . . . . . . Ordinary business income (loss). Subtract line 20 from line 6 . . . . . . . . . . . Excess net passive income or LIFO recapture tax (see instructions) . . 22a Tax from Schedule D (Form 1120S) . . . . . . . . . . . 22b Add lines 22a and 22b (see instructions for additional taxes) . . . . . . . . . . . . 2014 estimated tax payments and 2013 overpayment credited to 2014 23a Tax deposited with Form 7004 . . . . . . . . . . . . 23b Credit for federal tax paid on fuels (attach Form 4136) . . . . . 23c Add lines 23a through 23c . . . . . . . . . . . . . . . . . . . . . . Estimated tax penalty (see instructions). Check if Form 2220 is attached . . . . . . Amount owed. If line 23d is smaller than the total of lines 22c and 24, enter amount owed . . Overpayment. If line 23d is larger than the total of lines 22c and 24, enter amount overpaid . . Enter amount from line 26 Credited to 2015 estimated tax Refunded Gross receipts or sales . Tax and Payments Deductions (see instructions for limitations) Income b Returns and allowances c 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 a b c 23 a b c d 24 25 26 27 22c 23d 24 25 26 27 Paid Preparer Use Only Date Signature of officer Print/Type preparer's name Preparer's signature Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. May the IRS discuss this return with the preparer shown below (see instructions)? Sign Here 1c 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Yes Title Date Check if self-employed Firm's name Firm's EIN Firm's address Phone no. For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11510H No PTIN Form 1120S (2014) Form 1120S (2014) Schedule B 1 2 3 4 Page 2 Other Information (see instructions) a c See the instructions and enter the: a Business activity Check accounting method: Yes No Cash b Accrual Other (specify) b Product or service At any time during the tax year, was any shareholder of the corporation a disregarded entity, a trust, an estate, or a nominee or similar person? If "Yes," attach Schedule B-1, Information on Certain Shareholders of an S Corporation . . At the end of the tax year, did the corporation: a Own directly 20% or more, or own, directly or indirectly, 50% or more of the total stock issued and outstanding of any foreign or domestic corporation? For rules of constructive ownership, see instructions. If \"Yes,\" complete (i) through (v) below . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (i) Name of Corporation (ii) Employer Identification Number (if any) (iii) Country of Incorporation (iv) Percentage of Stock Owned (v) If Percentage in (iv) is 100%, Enter the Date (if any) a Qualified Subchapter S Subsidiary Election Was Made b Own directly an interest of 20% or more, or own, directly or indirectly, an interest of 50% or more in the profit, loss, or capital in any foreign or domestic partnership (including an entity treated as a partnership) or in the beneficial interest of a trust? For rules of constructive ownership, see instructions. If \"Yes,\" complete (i) through (v) below . . . . . . . (i) Name of Entity (ii) Employer Identification Number (if any) (iv) Country of Organization (iii) Type of Entity (v) Maximum Percentage Owned in Profit, Loss, or Capital 5 a At the end of the tax year, did the corporation have any outstanding shares of restricted stock? . . . . . . . If \"Yes,\" complete lines (i) and (ii) below. (i) Total shares of restricted stock . . . . . . . . . (ii) Total shares of non-restricted stock . . . . . . . . b At the end of the tax year, did the corporation have any outstanding stock options, warrants, or similar instruments? If \"Yes,\" complete lines (i) and (ii) below. (i) Total shares of stock outstanding at the end of the tax year (ii) Total shares of stock outstanding if all instruments were executed 6 7 . . Has this corporation filed, or is it required to file, Form 8918, Material Advisor Disclosure Statement, to provide information on any reportable transaction? . . . . . . . . . . . . . . . . . . . . . . . . Check this box if the corporation issued publicly offered debt instruments with original issue discount . . . . If checked, the corporation may have to file Form 8281, Information Return for Publicly Offered Original Issue Discount Instruments. If the corporation: (a) was a C corporation before it elected to be an S corporation or the corporation acquired an asset with a basis determined by reference to the basis of the asset (or the basis of any other property) in the hands of a C corporation and (b) has net unrealized built-in gain in excess of the net recognized built-in gain from prior years, enter the net unrealized built-in gain reduced by net recognized built-in gain from prior years (see instructions) . . . . . . . . . . . . . . . $ $ 9 Enter the accumulated earnings and profits of the corporation at the end of the tax year. 10 Does the corporation satisfy both of the following conditions? a The corporation's total receipts (see instructions) for the tax year were less than $250,000 . . . . . . . . . . b The corporation's total assets at the end of the tax year were less than $250,000 . . . . . . . . . . . . If \"Yes,\" the corporation is not required to complete Schedules L and M-1. 8 11 During the tax year, did the corporation have any non-shareholder debt that was canceled, was forgiven, or had terms modified so as to reduce the principal amount of the debt? . . . . . . . . . . . . . . . . If \"Yes,\" enter the amount of principal reduction $ 12 During the tax year, was a qualified subchapter S subsidiary election terminated or revoked? If \"Yes,\" see instructions 13 a Did the corporation make any payments in 2014 that would require it to file Form(s) 1099? . . . . . . . . . b If \"Yes,\" did the corporation file or will it file required Forms 1099? . . . . . . . . . . . . . . . . the . . . . Form 1120S (2014) Form 1120S (2014) Credits Deductions Income (Loss) Schedule K Ordinary business income (loss) (page 1, line 21) . . . . . . . . . . . . . Net rental real estate income (loss) (attach Form 8825) . . . . . . . . . . . Other gross rental income (loss) . . . . . . . . . . 3a Expenses from other rental activities (attach statement) . . 3b Other net rental income (loss). Subtract line 3b from line 3a . . . . . . . . . Interest income . . . . . . . . . . . . . . . . . . . . . . . Dividends: a Ordinary dividends . . . . . . . . . . . . . . . . . . b Qualified dividends . . . . . . . . . . 5b 6 Royalties . . . . . . . . . . . . . . . . . . . . . . . . . 7 Net short-term capital gain (loss) (attach Schedule D (Form 1120S)) . . . . . . . 8 a Net long-term capital gain (loss) (attach Schedule D (Form 1120S)) . . . . . . . b Collectibles (28%) gain (loss) . . . . . . . . . . . 8b c Unrecaptured section 1250 gain (attach statement) . . . . 8c 9 Net section 1231 gain (loss) (attach Form 4797) . . . . . . . . . . . . . 10 Other income (loss) (see instructions) . . Type 11 Section 179 deduction (attach Form 4562) . . . . . . . . . . . . . . . 12a Charitable contributions . . . . . . . . . . . . . . . . . . . . b Investment interest expense . . . . . . . . . . . . . . . . . . . c Section 59(e)(2) expenditures (1) Type (2) Amount d Other deductions (see instructions) . . . Type 13a Low-income housing credit (section 42(j)(5)) . . . . . . . . . . . . . . b Low-income housing credit (other) . . . . . . . . . . . . . . . . . c Qualified rehabilitation expenditures (rental real estate) (attach Form 3468, if applicable) . d Other rental real estate credits (see instructions) Type e Other rental credits (see instructions) . . . Type Foreign Transactions Alternative Minimum Tax (AMT) Items Biofuel producer credit (attach Form 6478) Other credits (see instructions) . . . . Name of country or U.S. possession . . 3 Total amount 1 2 3a b c 4 5 f g 14a b c Items Affecting Shareholder Basis Page Shareholders' Pro Rata Share Items . . . . Type . . . . . . . . 1 2 . . . 3c 4 5a . . . 6 7 8a . 9 10 11 12a 12b . . . 12c(2) . . . 12d 13a 13b 13c 13d 13e 13f 13g . . . . Gross income from all sources . . . . . . . . . . . . . . . . Gross income sourced at shareholder level . . . . . . . . . . . . Foreign gross income sourced at corporate level d Passive category . . . . . . . . . . . . . . . . . . . . e General category . . . . . . . . . . . . . . . . . . . . f Other (attach statement) . . . . . . . . . . . . . . . . . . Deductions allocated and apportioned at shareholder level g Interest expense . . . . . . . . . . . . . . . . . . . . . h Other . . . . . . . . . . . . . . . . . . . . . . . . Deductions allocated and apportioned at corporate level to foreign source income i Passive category . . . . . . . . . . . . . . . . . . . . j General category . . . . . . . . . . . . . . . . . . . . k Other (attach statement) . . . . . . . . . . . . . . . . . . Other information l Total foreign taxes (check one): Paid Accrued . . . . . . . m Reduction in taxes available for credit (attach statement) . . . . . . . . n Other foreign tax information (attach statement) 15a Post-1986 depreciation adjustment . . . . . . . . . . . . . . . b Adjusted gain or loss . . . . . . . . . . . . . . . . . . . c Depletion (other than oil and gas) . . . . . . . . . . . . . . . d Oil, gas, and geothermal propertiesgross income . . . . . . . . . . e Oil, gas, and geothermal propertiesdeductions . . . . . . . . . . . f Other AMT items (attach statement) . . . . . . . . . . . . . . . 16a Tax-exempt interest income . . . . . . . . . . . . . . . . . b Other tax-exempt income . . . . . . . . . . . . . . . . . . c Nondeductible expenses . . . . . . . . . . . . . . . . . . d Distributions (attach statement if required) (see instructions) . . . . . . . e Repayment of loans from shareholders . . . . . . . . . . . . . . . . . . . . 14b 14c . . . . . . . . . 14d 14e 14f . . . . . . 14g . . . . . . . . . 14i 14j 14k . . . . . . 14l 14m . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15a 15b 15c 15d 15e 15f 16a 16b 16c 16d 16e 14h Form 1120S (2014) Form 1120S (2014) ReconOther ciliation Information Schedule K Page 17a b c d Investment income . . . . . . . . . . . . . . . Investment expenses . . . . . . . . . . . . . . Dividend distributions paid from accumulated earnings and profits Other items and amounts (attach statement) 18 Income/loss reconciliation. Combine the amounts on lines 1 through 10 in the far right column. From the result, subtract the sum of the amounts on lines 11 through 12d and 14l Schedule L Balance Sheets per Books . . . . . . . . . . . . . . . . . . . . . 17a 17b 17c . . . Beginning of tax year Assets (a) 1 2a b 3 4 5 6 7 8 9 10a b 11a b 12 13a b 14 15 Cash . . . . . . . . . . . . Trade notes and accounts receivable . . Less allowance for bad debts . . . . . Inventories . . . . . . . . . . U.S. government obligations . . . . . Tax-exempt securities (see instructions) . Other current assets (attach statement) . . Loans to shareholders . . . . . . . Mortgage and real estate loans . . . . Other investments (attach statement) . . Buildings and other depreciable assets . . Less accumulated depreciation . . . . Depletable assets . . . . . . . . Less accumulated depletion . . . . . Land (net of any amortization) . . . . . Intangible assets (amortizable only) . . . Less accumulated amortization . . . . Other assets (attach statement) . . . . Total assets . . . . . . . . . . Liabilities and Shareholders' Equity 16 17 18 19 20 21 22 23 24 25 26 27 Accounts payable . . . . . . . . . Mortgages, notes, bonds payable in less than 1 year Other current liabilities (attach statement) . . Loans from shareholders . . . . . . . Mortgages, notes, bonds payable in 1 year or more Other liabilities (attach statement) . . . . Capital stock . . . . . . . . . . . Additional paid-in capital . . . . . . . Retained earnings . . . . . . . . . Adjustments to shareholders' equity (attach statement) Less cost of treasury stock . . . . . . Total liabilities and shareholders' equity . . . . . . . . . . . . . . . . . . . . . 4 Total amount Shareholders' Pro Rata Share Items (continued) 18 End of tax year (b) (c) (d) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) Form 1120S (2014) Form 1120S (2014) Schedule M-1 Page 5 Reconciliation of Income (Loss) per Books With Income (Loss) per Return Note. The corporation may be required to file Schedule M-3 (see instructions) 1 Net income (loss) per books 2 Income included on Schedule K, lines 1, 2, 3c, 4, 5a, 6, 7, 8a, 9, and 10, not recorded on books this year (itemize) 3 Expenses recorded on books this year not included on Schedule K, lines 1 through 12 and 14l (itemize): Depreciation $ Travel and entertainment $ a b 4 Add lines 1 through 3 Schedule M-2 . . . . . . . . . . . . . . 5 Income recorded on books this year not included on Schedule K, lines 1 through 10 (itemize): a Tax-exempt interest $ 6 Deductions included on Schedule K, lines 1 through 12 and 14l, not charged against book income this year (itemize): a Depreciation $ 7 Add lines 5 and 6 . . . . . 8 Income (loss) (Schedule K, line 18). Line 4 less line 7 Analysis of Accumulated Adjustments Account, Other Adjustments Account, and Shareholders' Undistributed Taxable Income Previously Taxed (see instructions) (a) Accumulated adjustments account 1 2 3 4 5 6 7 8 Balance at beginning of tax year . . . . . Ordinary income from page 1, line 21 . . . Other additions . . . . . . . . . . ( Loss from page 1, line 21 . . . . . . . ( Other reductions . . . . . . . . . . Combine lines 1 through 5 . . . . . . . Distributions other than dividend distributions Balance at end of tax year. Subtract line 7 from line 6 (b) Other adjustments account ) )( (c) Shareholders' undistributed taxable income previously taxed ) Form 1120S (2014) Form U.S. Income Tax Return for an S Corporation 1120S Department of the Treasury Internal Revenue Service 327210 , 2010, ending December , 20 38-1507869 Bottle-Up, Inc. TYPE OR PRINT C Check if Sch. M-3 attached 10 D Employer identification number Name 1-24-2000 B Business activity code number (see instructions) 2010 Do not file this form unless the corporation has filed or is attaching Form 2553 to elect to be an S corporation. See separate instructions. For calendar year 2010 or tax year beginning January A S election effective date OMB No. 1545-0130 E Date incorporated Number, street, and room or suite no. If a P.O. box, see instructions. 1234 Hill Street 1-8-2000 F Total assets (see instructions) City or town, state, and ZIP code Gainesville, FL 32607 750,028 $ 00 No If \"Yes,\" attach Form 2553 if not already filed G Is the corporation electing to be an S corporation beginning with this tax year? Yes Name change (3) Address change (2) Final return H Check if: (1) (4) S election termination or revocation (5) Amended return I Enter the number of shareholders who were shareholders during any part of the tax year . . . . . . . . . 2 Tax and Payments Deductions (see instructions for limitations) Income Caution. Include only trade or business income and expenses on lines 1a through 21. See the instructions for more information. 2500000 00 b Less returns and allowances 15000 00 1a 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Cost of goods sold (Schedule A, line 8) . . . . . . . . . . . . . Gross profit. Subtract line 2 from line 1c . . . . . . . . . . . . . Net gain (loss) from Form 4797, Part II, line 17 (attach Form 4797) . . . . . Other income (loss) (see instructionsattach statement) . . . . . . . . Total income (loss). Add lines 3 through 5 . . . . . . . . . . . . Compensation of officers . . . . . . . . . . . . . . . . . . Salaries and wages (less employment credits) . . . . . . . . . . . Repairs and maintenance . . . . . . . . . . . . . . . . . . Bad debts . . . . . . . . . . . . . . . . . . . . . . Rents . . . . . . . . . . . . . . . . . . . . . . . . Taxes and licenses . . . . . . . . . . . . . . . . . . . . Interest . . . . . . . . . . . . . . . . . . . . . . . Depreciation not claimed on Schedule A or elsewhere on return (attach Form 4562) Depletion (Do not deduct oil and gas depletion.) . . . . . . . . . . Advertising . . . . . . . . . . . . . . . . . . . . . . Pension, profit-sharing, etc., plans . . . . . . . . . . . . . . . Employee benefit programs . . . . . . . . . . . . . . . . . Other deductions (attach statement) . . . . . . . . . . . . . . Total deductions. Add lines 7 through 19 . . . . . . . . . . . . Ordinary business income (loss). Subtract line 20 from line 6 . . . . . . 22 a b c 23 a b c d 24 25 26 27 Excess net passive income or LIFO recapture tax (see instructions) . . 22a Tax from Schedule D (Form 1120S) . . . . . . . . . . . 22b Add lines 22a and 22b (see instructions for additional taxes) . . . . . . . . . . . . 2010 estimated tax payments and 2009 overpayment credited to 2010 23a Tax deposited with Form 7004 . . . . . . . . . . . . 23b Credit for federal tax paid on fuels (attach Form 4136) . . . . . 23c Add lines 23a through 23c . . . . . . . . . . . . . . . . . . . . . . Estimated tax penalty (see instructions). Check if Form 2220 is attached . . . . . . Amount owed. If line 23d is smaller than the total of lines 22c and 24, enter amount owed . . Overpayment. If line 23d is larger than the total of lines 22c and 24, enter amount overpaid . . Enter amount from line 26 Credited to 2011 estimated tax Refunded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . c Bal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2485000 1474000 1011000 1c 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 00 1011000 451020 38000 620 30000 39480 1500 11782 105000 11000 248602 938004 72996 22c 23d 24 25 26 27 Paid Preparer Use Only Date Signature of officer Print/Type preparer's name Preparer's signature Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. May the IRS discuss this return with the preparer shown below (see instructions)? Sign Here Gross receipts or sales Yes Title Date Jack Tralongo Jr Check if self-employed Firm's name Firm's EIN Firm's address Phone no. For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11510H No PTIN 1234567 Form 1120S (2010) Form 1120S (2010) Schedule A 1 2 3 4 5 6 7 8 9a Page b Check if there was a writedown of subnormal goods as described in Regulations section 1.471-2(c) . . . c Check if the LIFO inventory method was adopted this tax year for any goods (if checked, attach Form 970) d If the LIFO inventory method was used for this tax year, enter percentage (or amounts) of closing 9d inventory computed under LIFO . . . . . . . . . . . . . . . . . . . . . . e If property is produced or acquired for resale, do the rules of section 263A apply to the corporation? . . f Was there any change in determining quantities, cost, or valuations between opening and closing inventory? If \"Yes,\" attach explanation. 1 2 3 102000 900000 200000 Inventory at beginning of year . . . . . . . . . . . . . . . . . . . . . . . 1 Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Cost of labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Additional section 263A costs (attach statement) . . . . . . . . . . . . . . . . . 4 Other costs (attach statement) . . . . . . . . . . . . . . . . . . . . . . 5 Total. Add lines 1 through 5 . . . . . . . . . . . . . . . . . . . . . . . 6 Inventory at end of year . . . . . . . . . . . . . . . . . . . . . . . . 7 Cost of goods sold. Subtract line 7 from line 6. Enter here and on page 1, line 2 . . . . . . . 8 Check all methods used for valuing closing inventory: (i) Cost as described in Regulations section 1.471-3 (ii) Lower of cost or market as described in Regulations section 1.471-4 Other (Specify method used and attach explanation.) (iii) Schedule B . . . . . . . . 0 368000 1570000 96000 1474000 . . . . . . Check accounting method: a See the instructions and enter the: a Business activity 327210 Cash b 0 Yes Yes Other Information (see instructions) . . No No Yes No Accrual c Other (specify) b Product or service ornate At the end of the tax year, did the corporation own, directly or indirectly, 50% or more of the voting stock of a domestic corporation? (For rules of attribution, see section 267(c).) If \"Yes,\" attach a statement showing: (a) name and employer identification number (EIN), (b) percentage owned, and (c) if 100% owned, was a qualified subchapter S subsidiary election made? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Has this corporation filed, or is it required to file, Form 8918, Material Advisor Disclosure Statement, to provide information on any reportable transaction? . . . . . . . . . . . . . . . . . . . . . . . . 5 Check this box if the corporation issued publicly offered debt instruments with original issue discount . 6 7 8 9 . . . If checked, the corporation may have to file Form 8281, Information Return for Publicly Offered Original Issue Discount Instruments. If the corporation: (a) was a C corporation before it elected to be an S corporation or the corporation acquired an asset with a basis determined by reference to the basis of the asset (or the basis of any other property) in the hands of a C corporation and (b) has net unrealized built-in gain in excess of the net recognized built-in gain from prior years, enter the net unrealized built-in gain reduced by net recognized built-in gain from prior years (see instructions) . . . . . . . . . . . . . . . $ $ 0 Enter the accumulated earnings and profits of the corporation at the end of the tax year. Are the corporation's total receipts (see instructions) for the tax year and its total assets at the end of the tax year less than $250,000? If \"Yes,\" the corporation is not required to complete Schedules L and M-1 . . . . . . . . . During the tax year, was a qualified subchapter S subsidiary election terminated or revoked? If "Yes," see instructions . Income (Loss) Schedule K 1 2 3a b c 4 5 2 Cost of Goods Sold (see instructions) Shareholders' Pro Rata Share Items Ordinary business income (loss) (page 1, line 21) . . . . . . . Net rental real estate income (loss) (attach Form 8825) . . . . . Other gross rental income (loss) . . . . . . . . . . 3a Expenses from other rental activities (attach statement) . . . 3b Other net rental income (loss). Subtract line 3b from line 3a . . . Interest income . . . . . . . . . . . . . . . . . Dividends: a Ordinary dividends . . . . . . . . . . . . b Qualified dividends . . . . . . . . . . 5b 6 Royalties . . . . . . . . . . . . . . . . . . . 7 Net short-term capital gain (loss) (attach Schedule D (Form 1120S)) . 8 a Net long-term capital gain (loss) (attach Schedule D (Form 1120S)) . b Collectibles (28%) gain (loss) . . . . . . . . . . . 8b c Unrecaptured section 1250 gain (attach statement) . . . . 8c 9 Net section 1231 gain (loss) (attach Form 4797) . . . . . . . 10 Other income (loss) (see instructions) . . Type Total amount 72996 . . . . . . . . . . . . . . 1 2 . . . . . . . . . . . . . . . . . . . . . 3c 4 5a 11600 . . . . . . . . . . . . . . . . . . . . . 6 7 8a 0 . . . . . . . 9 10 1800 1100 0 Form 1120S (2010) Form 1120S (2010) Page Deductions Credits 11 12a b c d Section 179 deduction (attach Form 4562) Contributions . . . . . . . . . Investment interest expense . . . . Section 59(e)(2) expenditures (1) Type Other deductions (see instructions) . . 13a b c d e f g Low-income housing credit (section 42(j)(5)) . . . . . . . . . . . Low-income housing credit (other) . . . . . . . . . . . . . Qualified rehabilitation expenditures (rental real estate) (attach Form 3468) . Other rental real estate credits (see instructions) Type Type Other rental credits (see instructions) . . . . . . . . . . . . . . . Alcohol and cellulosic biofuel fuels credit (attach Form 6478) Other credits (see instructions) . . . . . Type Name of country or U.S. possession . . . . . . . . . . 14b 14c . . . . . . . . . 14d 14e 14f . . . . . . 14g . . . . . . . . . 14i 14j 14k . . . . . . 14l 14m 15a 15b 15c 15d 15e 15f 16a 16b 16c 16d 16e 17a 17b 17c 14a b c . . . . . . . . . . Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2) Amount 11 12a 12b 12c(2) 12d . . . . . Gross income from all sources . . . . . . . . . . . . . . . . Gross income sourced at shareholder level . . . . . . . . . . . . Foreign gross income sourced at corporate level d Passive category . . . . . . . . . . . . . . . . . . . . e General category . . . . . . . . . . . . . . . . . . . . f Other (attach statement) . . . . . . . . . . . . . . . . . . Deductions allocated and apportioned at shareholder level g Interest expense . . . . . . . . . . . . . . . . . . . . h Other . . . . . . . . . . . . . . . . . . . . . . . . Deductions allocated and apportioned at corporate level to foreign source income i Passive category . . . . . . . . . . . . . . . . . . . . j General category . . . . . . . . . . . . . . . . . . . . k Other (attach statement) . . . . . . . . . . . . . . . . . . Other information l Total foreign taxes (check one): Paid Accrued . . . . . . m Reduction in taxes available for credit (attach statement) . . . . . . . . n Other foreign tax information (attach statement) Foreign Transactions Alternative Minimum Tax (AMT) Items Items Affecting ReconOther Shareholder ciliation Information Basis . . . 3 Total amount Shareholders' Pro Rata Share Items (continued) 15a b c d e f 16a b c d e Post-1986 depreciation adjustment . . . . . . . Adjusted gain or loss . . . . . . . . . . . . Depletion (other than oil and gas) . . . . . . . . Oil, gas, and geothermal propertiesgross income . . Oil, gas, and geothermal propertiesdeductions . . . Other AMT items (attach statement) . . . . . . . Tax-exempt interest income . . . . . . . . . Other tax-exempt income . . . . . . . . . . Nondeductible expenses . . . . . . . . . . Distributions (attach statement if required) (see instructions) Repayment of loans from shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17a b c d Investment income . . . . . . . . . . . . . . . Investment expenses . . . . . . . . . . . . . . . Dividend distributions paid from accumulated earnings and profits Other items and amounts (attach statement) . . . . . . . . . . . . . . . . . . . . . 18 Income/loss reconciliation. Combine the amounts on lines 1 through 10 in the far right column. From the result, subtract the sum of the amounts on lines 11 through 12d and 14l . . . . . . . . . . . . . . . . . . . . . . 13a 13b 13c 13d 13e 13f 13g 14h 18 13400 86396 Form 1120S (2010) Form 1120S (2010) Schedule L Page Balance Sheets per Books Beginning of tax year Assets (a) 1 2a b 3 4 5 6 7 8 9 10a b 11a b 12 13a b 14 15 Cash . . . . . . . . . . . . Trade notes and accounts receivable . . Less allowance for bad debts . . . . . Inventories . . . . . . . . . . U.S. government obligations . . . . . Tax-exempt securities (see instructions) . Other current assets (attach statement) . . Loans to shareholders . . . . . . . Mortgage and real estate loans . . . . Other investments (attach statement) . . Buildings and other depreciable assets . . Less accumulated depreciation . . . . Depletable assets . . . . . . . . Less accumulated depletion . . . . . Land (net of any amortization) . . . . . Intangible assets (amortizable only) . . . Less accumulated amortization . . . . Other assets (attach statement) . . . . Total assets . . . . . . . . . . Liabilities and Shareholders' Equity 16 17 18 19 20 21 22 23 24 25 26 27 Accounts payable . . . . . . . . . Mortgages, notes, bonds payable in less than 1 year Other current liabilities (attach statement) . . Loans from shareholders . . . . . . . Mortgages, notes, bonds payable in 1 year or more Other liabilities (attach statement) . . . . Capital stock . . . . . . . . . . . Additional paid-in capital . . . . . . . Retained earnings . . . . . . . . . Adjustments to shareholders' equity (attach statement) Less cost of treasury stock . . . . . . Total liabilities and shareholders' equity . . 1 Net income (loss) per books Schedule M-1 . . . . . . . . . . . . . . . . . . . (b) (c) (d) 15000 116948 41500 ( 45180 ) 41500 ( ) 45180 102000 96000 10000 10000 118000 90000 374600 ( 160484 ) ( ) 375000 214116 ( 173100 ) ( ) 201900 160000 ( 4 End of tax year ) 190000 ( ) 660616 750028 36000 10000 44000 52000 20616 19666 10000 5000 210000 260000 10000 10000 330000 393362 ( ) ( ) 660616 750028 Reconciliation of Income (Loss) per Books With Income (Loss) per Return Note: Schedule M-3 required instead of Schedule M-1 if total assets are $10 million or moresee instructions 2 . . . . . . Income included on Schedule K, lines 1, 2, 3c, 4, 5a, 6, 7, 8a, 9, and 10, not recorded on books this year (itemize): 3 a b Expenses recorded on books this year not included on Schedule K, lines 1 through 12 and 14l (itemize): Depreciation $ Travel and entertainment $ 133362 5 Income recorded on books this year not included on Schedule K, lines 1 through 10 (itemize): a Tax-exempt interest $ 67000 6 Deductions included on Schedule K, lines 1 through 12 and 14l, not charged against book income this year (itemize): a Depreciation $ 7 Add lines 5 and 6 4 Add lines 1 through 3 Schedule M-2 . . . . . . . . . . . . 200362 Analysis of Accumulated Adjustments Account, Other Adjustments Account, and Shareholders' Undistributed Taxable Income Previously Taxed (see instructions) (a) Accumulated adjustments account 1 2 3 4 5 6 7 8 . 200362 8 Income (loss) (Schedule K, line 18). Line 4 less line 7 Balance at beginning of tax year . . . . . Ordinary income from page 1, line 21 . . . Other additions . . . . . . . . . . ( Loss from page 1, line 21 . . . . . . . ( Other reductions . . . . . . . . . . Combine lines 1 through 5 . . . . . . . Distributions other than dividend distributions Balance at end of tax year. Subtract line 7 from line 6 (b) Other adjustments account (c) Shareholders' undistributed taxable income previously taxed 330000 133362 ) )( 133362 70000 63362 ) 63362 393362 Form 1120S (2010) Name Course Tutor Date Adjustment to tax allowable net income Cost of goods sold Cost of goods sold = 1474000 Less depreciation (38,000) Total cost of goods sold 1436000 Depreciation MACRS depreciation 74311 Depreciation from COGS 38000 Less book depreciation (11782) Allowable depreciation 100,529 Depreciation on personal property is not an allowable expense Penalty, fines and charitable cash donations are not allowable taxes when it comes to taxation purposes. The first $5250 of fringe benefit is exclude from taxation therefore the deductible fringe benefit is $11000-$5250= $5750 Employee benefits Fringe benefits 5750 Add meals and entertainment 21000 Total employee benefit 26750 Salaries 2% of highly-compensated officers are not deductible =120,000-(2%*120000) =117600 Therefore allowable salaries expenses= 451020-120000) =331020 Insurance expense Book value 24,500 Less premium (3000) Allowable insurance expenses 21500 Capital gain 148666-100000=48666 Taxes and licenses Payroll taxes 36980 Other taxes 2500 Total 39480 Interest expenses 1500+500=2000 Other deduction Utilities expense 54,000 Automobile and truck expenses 26000 Office supplies expense 9602 Selling expense 100000 Accounting and legal expenses 4500 Total 194102 Interest income Interest on US Treasury bill Interest on Florida bond Total interest income 1200 600 1800