I need help with the Schedule D and the Form 4797. I also need help with the election to defer recognition of gain on involuntary conversion.

Real Running Gear Corp. Federal Tax Return FACTS Alice Boyd developed and patented a line of specialized running attire. The attire is constructed for durability and quick wicking and is made of highly reflective materials for night-time use. Alice set up Real Running Gear Corp (RRG) to manufacture and sell her product. RRG is a small, closely-held manufacturer (the business code number is 339900, and the employer identification number is 111111111). The company is located at 325 Ground Road, Cedar City, Utah 84721. The corporation, which uses a calendar year for tax purposes, has been an S corporation since its incorporation on August 2, 2010. Alice (social security number 111-11-1111) is president of the corporation. Alice owned 100% of the stock until September 15, 2014 when she sold 5% to Candice Boyd (Alice's sister, social security number 222-22-2222), who serves as vice president for the company. Both officers devote 100 percent of their time to the corporation and live at 333 Opportunity Street, Cedar City, Utah 84720. Annual compensation is $80,000 for Alice and $40,000 for Candice. The corporation does not engage in activities to which the at-risk or passive activity loss limitations apply.7 RRG files its tax return on the accrual method. Inventory has been consistently valued at cost under the FIFO method using the full absorption procedure. Inventory capitalization rules of Internal Revenue code Section 263A do not apply due to the 'small business exception' (average annual gross receipts for the three preceding taxable years do not exceed $10 million). The accounting records are computerized. 1 The corporation's audited income statement and balance sheet for the current year, prepared by the accounting firm of Barnes & Lewis, CPAs, follow: 2 3 NOTES 1. Included in employee benefits expense are $650 and $450 premiums for $50,000 (face) group term life insurance premiums for Alice and Candice, respectively. Family members are named beneficiaries in the policies. 2. All notes payable were issued at par and provide market interest rates. 3. Employees account to the company and are reimbursed by the exact amount of travel and entertainment expenses incurred on business. Included in Miscellaneous Expense are $1,900 for transportation expenses, $350 for meals, and $250 for entertainment. 4. Dividend income is from minor investments in: 5. Contributions were paid in cash to: 6. The key-person life insurance policy provides $500,000 coverage on Alice Boyd. RRG is the owner and beneficiary of the policy. 7. A schedule attached in the prior year's working papers reconciles Retained Earnings and Accumulated Adjustments Account balances at 12/31/13 as follows: 8. The balance of the \"Other Adjustments Account\" (Form 1120S, p. 5, Sch. M-2, col. (b)) at the beginning of the year was $-0-. 9. Depreciation information for financial accounting purposes (not tax) is attached below: 4 10. Machine #2, purchased on 02/01/13 for $70,000, was sold to an unrelated party on 11/01/14 for $72,000. 11. Machine #1, purchased on 07/01/12 for $30,000, was totally destroyed by severe storm that flooded the piece of machinery on 04/01/14. Proceeds of $23,000 were received from the insurance company. On 08/01/14 $21,000 of the proceeds were invested in a replacement machine. Assume there will be no further qualified reinvestment of the proceeds. 12. Interest expense was on loans for the following purpose: 13. On June 5, 2014, 550 shares of Carthartt Corp. common stock were sold for $2.50 a share. The company bought 2,000 shares of the stock on June 2, 2013 for $10,000. The stock were split 3for-1 on February 21, 2014. 14. On May 15, 2013 RRG purchased at par $15,300 of Iron County, Utah water sewer bonds. Interest of $620 was received on the bonds during the years. 15. Assume that compensation of officers and other salaries and wages do not related to production activities. The assumption removes the Domestic Production Activities deduction from this practice set. REQUIRED From the above information, prepare RRG's 2014 Federal income tax return (Form 1120S), including all forms, schedule and supporting statements as indicated below. Unless otherwise noted, assume RRG makes all available elections to minimize the shareholders' current taxable income. Round amounts to the nearest dollar. If additional information is needed, make realistic assumptions and fill in all required data. 5 Even though the corporation may not be technically required to do so, Alice has expressed a desire that Schedule L (Balance Sheets), Schedule M-1 (Reconciliation of Income (Loss) per Books With Income (Loss) per Return), and Schedule M-2 (Analysis of Accumulated Adjustments Account, Other Adjustments Account, and Shareholders' Undistributed Taxable Income Previously Taxed) on Form 1120S, p.5 be completed. TAX DEPRECIATION INFORMATION The following information will be needed to determine current year depreciation and accumulated depreciation for tax purposes. MACRS (Modified Accelerated Cost Recovery System For property placed in service after 1986): Machinery and equipment (7-year statutory life, 200% declining balance switching to straight line, half-year convention). Statutory percentage for assets placed in service during a year are 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, 8.92%, and 4.46% for recovery years 1-8, respectively. Remember, in the year of disposition only take one-half of the normal MACRS amount. The corporation has not elected Internal Revenue Code Sec. (IRC Sec.) 179 expense in the past; however, IRC Sec. 179 expense is to be claimed for machinery and equipment placed in service on 05/01/14. ALTERNATIVE MINIMUM TAX (Tax Preferences and Adjustments) For this practice set, ignore effects of the above cost recoveries on the Alternative Minimum Tax (i.e., leave the applicable spaces blank for these items in the Adjustments and Tax Preferences Items section of Schedules K and K-1). REQUIRED FORMS Form 1120S Schedule K-1s (Alice and Candice Boyd) Form 1125-A Form 4797 Form 4562 Schedule D (Form 1120S) Attachments: Election to Defer Recognition of Gain on Involuntary Conversion Nondeductible expenses (Form 1120S, Schedule K, Line 16c) Details for Schedule M-1, Lines 2 and 3b Details for Schedule M-2, Lines 3and 5 CHECK FIGURES 1120S Line 21 Ordinary Business Income $200,102 Schedule M-1 line 8 $178,060 6 GRADING: The tax return is worth 150 points. Below is a list of possible points for each form. Calculate grade by multiplying 150 x (points earned/245). Form 1120s page 1 1120s page 2 1120s page 3 1120s page 4 1120s page 5 Schedule K-1 Alice Schedule K-1 Candice Form 4797 page 1 Form 4797 page 2 Form 4562 Schedule D Section 1033 election Election to not take bonus depreciation Schedule K line 16c supporting schedule M-1 line 2 supporting schedule M-1 line 3b supporting schedule M-2 line 3 supporting schedule M-2 line 5 supporting schedule Total Points 27 14 11 32 20 24 24 6 23 21 6 10 3 5 3 5 4 7 245 7