.I SELECTED ! Schedule D:Net Long-Term Capital Gains or Losses only its a team work. I need in 3-4 just just scehdule D

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, 20Y5, the corporation had $55,387 in accrued federal income taxes. Mike's Sporting Goods, Inc. made four estimated tax payments totaling $69,117 as follows: ! ! ! ! $17,280 on 4/15/20Y5 $17,280 on 6/15/20Y5 $17,280 on 9/15/20Y5 $17,871 on 1/15/20Y6 See the cancelled checks in Appendix F. Tax Credits: The work opportunity credit is an incentive to hire persons from groups with a particularly high unemployment rate or other special employment needs. Given the high unemployment rate of college students, Mike's Sporting Goods, Inc. is eligible for a $6,000 work opportunity credit. Hint: use Form 5884. The credit will then carry over to the Schedule J of the 1120. Reconciling Book to Return: Mike's Sporting Goods, Inc. has the following non-deductible expenses on its Income Statement Per Books: Premiums paid on term life insurance on corporate officers Interest paid to purchase tax-exempt state bonds Nondeductible contributions Reduction of salaries by work opportunity credit Total $9,500 850 500 6,000 $16,850 Deductible state and local taxes (not federal income tax) totaled $15,000 If Mike's Sporting Goods, Inc. owes income tax, the corporation will mail a check; if, otherwise, credit any overpayment to next years estimated taxes. III. Steps to Completion: Prepare IRS Form 1120 1. Prepare Schedules M-1: Reconciliation of Income (Loss) per Books with Income per Return using financial data in the Appendices. 2. Prepare Schedule M-2: Analysis of Unappropriated Retained Earnings per Books using financial data in the Appendices. IV. Deliverables: The following forms and schedules, combined as a single PDF document, are required: ! ! ! ! ! ! ! ! ! ! ! ! ! ! Form 1120 Form 4562: Depreciation and Amortization Schedule C: Total Special Deductions Schedule D: Net Long-Term Capital Gains or Losses Schedule J: Total Tax Schedule J: Total Payments and Credits Schedule K: Accuracy Schedule L: End of Tax Year: Total Liabilities and Stockholder's Equity Form 8949: Totals for Proceeds, Basis, & Gain/Loss Form 1125-A: Total for Cost of Goods Sold Form 3800: General Business Credit: Credit Allowed for the Current Year M-1 Income M-2 Balance at End of Year In addition, each student must separately submit their Group Contribution Report in their Assignment folder. Appendices: Table of Contents Appendix A: Basic corporate information Appendix B: List of select Accounts and Balances per Book o (Financial basis, NOT tax basis) Appendix C: Income Statement per Books o (Financial basis, not tax) Appendix D: Comparative Balance Sheet per Books o (Financial basis, not tax) Appendix E: General Ledger Retained Earnings account in T-account format. Appendix F: Cancelled checks to the Internal Revenue Service for estimated quarterly tax payments APPENDIX A: Basic corporate information Corporate Name Mike's Sporting Goods, Inc. Corporate Address 422 Bruce Lane Annapolis, MD 21401 Federal Tax ID 52-9746858 Corporate officers: President/CEO Michael S. Duke Vice President Juan Delaross Treasurer Elroy Mulcane Secretary Scott Barnett APPENDIX B: List of select Accounts and Balances per Book (financial-basis, not tax basis). Account balances may or may not be reported on Form 1120. Hint: You will need these items to prepare Schedule M of the 1120. Account Account Balance Advertising 8,700 Bad debts 1,600 Charitable Contributions to Not-for-Profit organizations Charitable Contributions to political campaigns Compensation of officers Cost of goods sold Depreciation--indirect 24,000 500 70,000 2,050,000 3,580 Dividends received 10,000 Federal income tax accrued 55,387 Interest expense on note to buy tax-exempt state bonds Interest expense on note to buy corporate bonds 850 27,200 Interest income on tax exempt state bonds 5,000 Interest income on taxable corporate bonds 5,500 Loss on securities 3,600 Maintenance and Repairs Net income per books after tax 800 517,783 Other operating expenses 78,300 Premiums on life insurance 9,500 Proceeds from life insurance 9,500 Rental expense 9,200 Salaries and wages--indirect Sales - gross 44,000 2,910,000 Sales returns and allowances 20,000 State and Local Taxes 15,000 APPENDIX C: Income Statement per Book (financial, not tax) Mike's Sporting Goods, Inc. Income Statement (per Books) Year ending 20Y5 Revenue: Gross sales Less: Returns & allowances Net sales Cost of goods sold Gross Margin Operating expenses: Advertising Bad debt Charitable contributions: Deductible Non-deductible Depreciation Equipment rental Life insurance Maintenance & repairs Officers compensation Salaries and wages Total operating expenses Operating Income Other revenue and gains: Dividend income Interest income: Maryland bonds Interest income: All other bonds Proceeds from life insurance Total other revenue and gains Other expenses and losses: Accrued federal income taxes Other operating expenses Loss on investments Total other expenses and losses Total income before interest and taxes Interest expense on note to purchase taxexempt bonds Interest expense on all other notes Income before tax Less: State & Local Income tax Net income per books after tax $ 2,910,000 20,000 2,890,000 2,050,000 840,000 8,700 1,600 24,000 500 24,500 3,580 9,200 9,500 800 70,000 44,000 171,880 668,120 10,000 5,000 5,500 9,500 30,000 55,387 78,300 3,600 137,287 560,833 850 27,200 28,050 532,783 15,000 517,783 APPENDIX D: Comparative Balance Sheet per Books (financial, not tax) Mike's Sporting Goods, Inc. Balance Sheet per Books December 31, 20Y4 and 20Y5 Year Ending 20Y4 Assets Cash Accounts receivable (net) Inventory Tax-exempt securities Other current assets Other investments Buildings Accumulated depreciation Land Other assets Total assets Liabilities & Stockholder's Equity Accounts payable Notes payable (short term) Other current liabilities Notes payable (long term) Stockholder's Equity Common stock Retained earnings: Appropriated Retained earnings: Unappropriated Total liabilities & Stockholder's equity Year ending 20Y5 114,700 98,400 426,000 100,000 26,300 100,000 272,400 88,300 184,100 20,000 14,800 1,084,300 329,564 235,001 495,479 120,000 17,266 80,000 296,700 104,280 192,420 20,000 19,300 1,509,030 428,500 4,300 6,800 176,700 334,834 4,300 7,400 264,100 200,000 30,000 238,000 200,000 40,000 658,396 1,084,300 1,509.030 APPENDIX E: General ledger Retained Earnings account in T-account format Explanations: General Ledger Retained Earnings Account Debits Credits Explanations: Contingencies 10,000 238,000 Beg balance Accrued income tax 55,387 532,783 Net Income before tax 65,000 18,000 Income tax refund Dividends paid Ending balance 658,396 APPENDIX F: Canceled checks 2015 Instructions for Form 1120 Department of the Treasury Internal Revenue Service U.S. Corporation Income Tax Return Section references are to the Internal Revenue Code unless otherwise noted. Contents Photographs of Missing Children . The Taxpayer Advocate Service . . Direct Deposit of Refund . . . . . . . How To Make a Contribution To Reduce Debt Held by the Public . . . . . . . . . . . . . . . . How To Get Forms and Publications . . . . . . . . . . . . General Instructions . . . . . . . . . . Purpose of Form . . . . . . . . . . . . Who Must File . . . . . . . . . . . . . When To File . . . . . . . . . . . . . . Where To File . . . . . . . . . . . . . . Who Must Sign . . . . . . . . . . . . . Paid Preparer Authorization . . . . . Assembling the Return . . . . . . . . Tax Payments . . . . . . . . . . . . . Estimated Tax Payments . . . . . . Interest and Penalties . . . . . . . . . Accounting Methods . . . . . . . . . Accounting Period . . . . . . . . . . . Rounding Off to Whole Dollars . . . Recordkeeping . . . . . . . . . . . . . Other Forms and Statements That May Be Required . . . . . . . . Specific Instructions . . . . . . . . . . Period Covered . . . . . . . . . . . . Name and Address . . . . . . . . . . Identifying Information . . . . . . . . Employer Identification Number (EIN) . . . . . . . . . . . . . . . . Total Assets . . . . . . . . . . . . . . . Initial Return, Final Return, Name Change, or Address Change . . . . . . . . . . . . . . . Income . . . . . . . . . . . . . . . . . . Deductions . . . . . . . . . . . . . . . Schedule C. Dividends and Special Deductions . . . . . . . Schedule J. Tax Computation and Payment . . . . . . . . . . . . . . Schedule K. Other Information . . . Schedule L. Balance Sheets per Books . . . . . . . . . . . . . . . . Schedule M-1. Reconciliation of Income (Loss) per Books With Income per Return . . . . . . . . Principal Business Activity Codes . . . . . . . . . . . . . . . Index . . . . . . . . . . . . . . . . . . . Page ... 1 ... 1 ... 1 ... 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 2 2 2 3 3 3 3 4 4 4 5 5 5 5 . . . . . . . . . . . . . . . 5 6 6 6 6 ... 7 ... 7 ... 8 ... 8 ... 9 . . 15 . . 17 . . 19 . . 20 . . 21 . . 23 . . 26 Future Developments For the latest information about developments related to Form 1120 and its instructions, such as legislation Jan 21, 2016 enacted after they were published, go to www.irs.gov/form1120. What's New Information reporting requirements for health insurance offers and coverage. Beginning in 2015, under the Affordable Care Act, applicable employers with 50 or more full-time employees (including full-time equivalent employees) in the previous year are required to report the information required under sections 6055 and 6056 about offers of health coverage and enrollment in health coverage for their employees. For more information, see the 2015 Instructions for Forms 1094-C and 1095-C. Also, for information related to the Affordable Care Act, visit www.irs.gov/ ACA. Photographs of Missing Children The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in instructions on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. The Taxpayer Advocate Service The Taxpayer Advocate Service (TAS) is an independent organization within the IRS that helps taxpayers and protects taxpayer rights. TAS's job is to ensure that every taxpayer is treated fairly and knows and understands their rights under the Taxpayer Bill of Rights. As a taxpayer, the corporation has rights that the IRS must abide by in its dealings with the corporation. TAS can help the corporation if: A problem is causing financial difficulty for the business. The business is facing an immediate threat of adverse action. The corporation has tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. TAS has offices in every state, the District of Columbia, and Puerto Rico. Local advocates' numbers are in their local directories and at Cat. No. 11455T www.taxpayeradvocate.irs.gov/. The corporation can also call TAS at 1-877-777-4778. TAS also works to resolve large-scale or systemic problems that affect many taxpayers. If the corporation knows of one of these broad issues, please report it to TAS through the Systemic Advocacy Management System at www.irs.gov/ sams. For more information, go to www.irs.gov/advocate. Direct Deposit of Refund To request a direct deposit of the corporation's income tax refund into an account at a U.S. bank or other financial institution, attach Form 8050, Direct Deposit of Corporate Tax Refund. See the instructions for line 36. How To Make a Contribution To Reduce Debt Held by the Public To help reduce debt held by the public, make a check payable to \"Bureau of the Public Debt.\" Send it to: Bureau of the Public Debt, Department G, P.O. Box 2188, Parkersburg, WV 26106-2188. Or, enclose a check with the income tax return. Do not add the contributions to any tax the corporation may owe. Contributions to reduce debt held by the public are deductible subject to the rules and limitations for charitable contributions. How To Get Forms and Publications Internet. You can access the IRS website 24 hours a day, 7 days a week, at IRS.gov to: Download forms, instructions, and publications; Order IRS products online; Research your tax questions online; Search publications online by topic or keyword; View Internal Revenue Bulletins (IRBs) published in recent years; and Sign up to receive local and national tax news by email. Tax forms and publications. The corporation can download or print all of the forms and publications it may need on www.irs.gov/formspubs. Otherwise the corporation can go to www.irs.gov/ orderforms to place an order and have forms mailed to it. The corporation should receive its order within 10 business days. General Instructions Purpose of Form Use Form 1120, U.S. Corporation Income Tax Return, to report the income, gains, losses, deductions, credits, and to figure the income tax liability of a corporation. Who Must File Unless exempt under section 501, all domestic corporations (including corporations in bankruptcy) must file an income tax return whether or not they have taxable income. Domestic corporations must file Form 1120, unless they are required, or elect to file a special return. See Special Returns for Certain Organizations, below. Entities electing to be taxed as corpo rations. A domestic entity electing to be classified as an association taxable as a corporation must file Form 1120, unless it is required to, or elects to file a special return listed under Special Returns for Certain Organizations, below. The entity must also file Form 8832, Entity Classification Election, and attach a copy of Form 8832 to Form 1120 (or the applicable return) for the year of the election. For more information, see Form 8832 and its instructions. Limited liability companies (LLC). If an entity with more than one owner was formed as an LLC under state law, it generally is treated as a partnership for federal income tax purposes and files Form 1065, U.S. Return of Partnership Income. Generally, a single-member LLC is disregarded as an entity separate from its owner and reports its income and deductions on its owner's federal income tax return. The LLC can file a Form 1120 only if it has filed Form 8832 to elect to be treated as an association taxable as a corporation. For more information about LLCs, see Pub. 3402, Taxation of Limited Liability Companies. Corporations engaged in farming. A corporation (other than a corporation that is a subchapter T cooperative) that engages in farming should use Form 1120 to report the income (loss) from such activities. Enter the income and deductions of the corporation according to the instructions for lines 1 through 10 and 12 through 29. Ownership interest in a Financial As set Securitization Investment Trust (FASIT). Special rules apply to a FASIT in existence on October 22, 2004, to the extent that regular interests issued by the FASIT before October 22, 2004, continue to remain outstanding in accordance with their original terms. If a corporation holds an ownership interest in a FASIT to which these special rules apply, it must report all items of income, gain, deductions, losses, and credits on the corporation's income tax return (except as provided in section 860H). Show a breakdown of the items on an attached statement. For more information, see sections 860H and 860L (repealed with certain exceptions). Special Returns for Certain Organizations Instead of filing Form 1120, certain organizations, as shown below, file special returns. If the organization is a: File Form Exempt organization with unrelated trade or business income 990T Religious or apostolic organization exempt under section 501(d) 1065 Entity formed as a limited liability company under state law and treated as a partnership for federal income tax purposes 1065 Subchapter T cooperative association (including a farmers' cooperative) 1120C Entity that elects to be treated as a real estate mortgage investment conduit (REMIC) under section 860D 1066 Interest charge domestic international sales corporation (section 992) Foreign corporation (other than life and property and casualty insurance company filing Form 1120-L or Form 1120-PC) 1120ICDISC 1120F 1120L Fund set up to pay for nuclear decommissioning costs (section 468A) 1120ND Property and casualty insurance company (section 831) 1120PC Political organization (section 527) 1120POL Real estate investment trust (section 856) 1120REIT Regulated investment company (section 851) 1120RIC S corporation (section 1361) Settlement fund (section 468B) 1120S 1120SF Electronic Filing Corporations can generally electronically file (e-file) Form 1120, related forms, schedules, and attachments, Form 7004 (automatic extension of time to file) and Forms 940, 941, and 944 (employment tax returns). If there is a balance due, the corporation can authorize an electronic funds withdrawal while e-filing. Form 1099 and other information returns can also be electronically filed. The option to e-file does not, however, apply to certain returns. Certain corporations with total assets of $10 million or more that file at least 250 returns a year are required to e-file Form 1120. See Regulations section 301.6011-5. However, these corporations can request a waiver of the electronic filing requirements. See Notice 2010-13, 2010-4 I.R.B. 327. For more information, visit www.irs.gov/ Filing. Click on the \"Self-Employed & Small-Businesses\" and \"Corporations\" links. When To File Foreign sales corporation (section 922) 1120FSC Condominium management, residential real estate management, or timeshare association that elects to be treated as a homeowners association under section 528 1120H 2 Life insurance company (section 801) Generally, a corporation must file its income tax return by the 15th day of the 3rd month after the end of its tax year. A new corporation filing a short-period return must generally file by the 15th day of the 3rd month after the short period ends. A corporation that has dissolved must generally file by the 15th day of the 3rd month after the date it dissolved. If the due date falls on a Saturday, Sunday, or legal holiday, the corporation can file on the next business day. Instructions for Form 1120 Private Delivery Services Corporations can use certain private delivery services designated by the IRS to meet the \"timely mailing as timely filing\" rule for tax returns. These private delivery services include only the following. Federal Express (FedEx): FedEx First Overnight, FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Next Flight Out, FedEx International Priority, FedEx International First, and FedEx International Economy. United Parcel Service (UPS): UPS Next Day Air Early AM, UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A.M., UPS Worldwide Express Plus, and UPS Worldwide Express. The private delivery service can tell you how to get written proof of the mailing date. For the IRS mailing address to use if you are using a private delivery service, go to IRS.gov and enter \"private delivery services\" in the search box. Private delivery services can't deliver items to P.O. boxes. You CAUTION must use the U.S. Postal Service to mail any item to an IRS P.O. box address. ! Extension of Time To File File Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns, to request a 6-month extension of time to file. Generally, the corporation must file Form 7004 by the regular due date of the return. See the Instructions for Form 7004. Who Must Sign The return must be signed and dated by: The president, vice president, treasurer, assistant treasurer, chief accounting officer; or Any other corporate officer (such as tax officer) authorized to sign. If a return is filed on behalf of a corporation by a receiver, trustee, or assignee, the fiduciary must sign the return, instead of the corporate officer. Returns and forms signed by a receiver or trustee in bankruptcy on behalf of a corporation must be accompanied by a copy of the order or instructions of the court authorizing signing of the return or form. If an employee of the corporation completes Form 1120, the paid preparer space should remain blank. Anyone who prepares Form 1120 but does not charge the corporation should not complete that section. Generally, anyone who is paid to Instructions for Form 1120 prepare the return must sign it and fill in the \"Paid Preparer Use Only\" area. The paid preparer must complete the required preparer information and: Sign the return in the space provided for the preparer's signature. Give a copy of the return to the taxpayer. A paid preparer may sign original or amended returns by rubber stamp, mechanical device, or computer software program. TIP Paid Preparer Authorization If the corporation wants to allow the IRS to discuss its 2015 tax return with the paid preparer who signed it, check the \"Yes\" box in the signature area of the return. This authorization applies only to the individual whose signature appears in the \"Paid Preparer Use Only\" section of the return. It does not apply to the firm, if any, shown in that section. If the \"Yes\" box is checked, the corporation is authorizing the IRS to call the paid preparer to answer any questions that may arise during the processing of its return. The corporation is also authorizing the paid preparer to: Give the IRS any information that is missing from the return, Call the IRS for information about the processing of the return or the status of any related refund or payment(s), and Respond to certain IRS notices about math errors, offsets, and return preparation. The corporation is not authorizing the paid preparer to receive any refund check, bind the corporation to anything (including any additional tax liability), or otherwise represent the corporation before the IRS. The authorization will automatically end no later than the due date (excluding extensions) for filing the corporation's 2016 tax return. If the corporation wants to expand the paid preparer's authorization or revoke the authorization before it ends, see Pub. 947, Practice Before the IRS and Power of Attorney. Assembling the Return To ensure that the corporation's tax return is correctly processed, attach all schedules and other forms after page 5 of Form 1120 in the following order. Where To File File the corporation's return at the applicable IRS address listed below. If the corporation's principal And the total assets at business, office, or agency the end of the tax year is located in: are: Connecticut, Delaware, District Less than $10 million of Columbia, Florida, Georgia, and Schedule M-3 is not Illinois, Indiana, Kentucky, filed Maine, Maryland, $10 million or more, or Massachusetts, Michigan, less than $10 million and New Hampshire, New Jersey, Schedule M-3 is filed New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, West Virginia, Wisconsin Alabama, Alaska, Arizona, Arkansas, California, Colorado, Hawaii, Idaho, Iowa, Kansas, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, Wyoming A foreign country or U.S. possession Use the following address: Department of the Treasury Internal Revenue Service Center Cincinnati, OH 45999-0012 Department of the Treasury Internal Revenue Service Center Ogden, UT 84201-0012 Any amount Department of the Treasury Internal Revenue Service Center Ogden, UT 84201-0012 Any amount Internal Revenue Service Center P.O. Box 409101 Ogden, UT 84409 A group of corporations with members located in more than one service center area will often keep all the books and records at the principal office of the managing corporation. In this case, the tax returns of the corporations may be filed with the service center for the area in which the principal office of the managing corporation is located. 3 1. Schedule N (Form 1120). 2. Schedule D (Form 1120). 3. Schedule O (Form 1120). 4. Form 4626. 5. Form 8050. 6. Form 1125-A. 7. Form 4136. 8. Form 8941. 9. Form 3800. 10. Additional schedules in alphabetical order. 11. Additional forms in numerical order. 12. Supporting statements and attachments. Complete every applicable entry space on Form 1120. Do not enter \"See Attached\" or \"Available Upon Request\" instead of completing the entry spaces. If more space is needed on the forms or schedules, attach separate sheets using the same size and format as the printed forms. If there are supporting statements and attachments, arrange them in the same order as the schedules or forms they support and attach them last. Show the totals on the printed forms. Enter the corporation's name and EIN on each supporting statement or attachment. Tax Payments Generally, the corporation must pay any tax due in full no later than the 15th day of the 3rd month after the end of the tax year. See the instructions for line 34. If the due date falls on a Saturday, Sunday, or legal holiday, the payment is due on the next day that isn't a Saturday, Sunday, or legal holiday. Electronic Deposit Requirement Corporations must use electronic funds transfer to make all federal tax deposits (such as deposits of employment, excise, and corporate income tax). Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). However, if the corporation does not want to use EFTPS, it can arrange for its tax professional, financial institution, payroll service, or other trusted third party to make deposits on its behalf. Also, it may arrange for its financial institution to submit a same-day payment (discussed below) on its behalf. EFTPS is a free service provided by the Department of the Treasury. Services provided by a tax professional, financial institution, payroll service, or other third party may have a fee. To get more information about EFTPS or to enroll in EFTPS, visit www.eftps.govor call 1-800-555-4477 (TTY/TDD 1-800-733-4829). Depositing on time. For any deposit made by EFTPS to be on time, the corporation must submit the deposit by 8 p.m. Eastern time the day before the date the deposit is due. If the corporation uses a third party to make deposits on its behalf, they may have different cutoff times. Use Form 2220, Underpayment of Estimated Tax by Corporations, to see if the corporation owes a penalty and to figure the amount of the penalty. If Form 2220 is completed, enter the penalty on line 33. See the instructions for line 33. Sameday wire payment option. If the corporation fails to submit a deposit transaction on EFTPS by 8 p.m. Eastern time the day before the date a deposit is due, it can still make its deposit on time by using the Federal Tax Collection Service (FTCS). To use the same-day wire payment method, the corporation will need to make arrangements with its financial institution ahead of time regarding availability, deadlines, and costs. Financial institutions may charge a fee for payments made this way. To learn more about the information the corporation will need to provide to its financial institution to make a same-day wire payment, visit the IRS website at www.irs.gov/Payments and click on \"Same-day wire.\" If the corporation receives a notice about penalties after it files CAUTION its return, send the IRS an explanation and we will determine if the corporation meets reasonable-cause criteria. Do not attach an explanation when the corporation's return is filed. Estimated Tax Payments Generally, the following rules apply to the corporation's payments of estimated tax. The corporation must make installment payments of estimated tax if it expects its total tax for the year (less applicable credits) to be $500 or more. The installments are due by the 15th day of the 4th, 6th, 9th, and 12th months of the tax year. If any date falls on a Saturday, Sunday, or legal holiday, the installment is due on the next regular business day. The corporation must use electronic funds transfer to make installment payments of estimated tax. Use Form 1120-W, Estimated Tax for Corporations, as a worksheet to compute estimated tax. See the Instructions for Form 1120-W. Penalties may apply if the corporation does not make required estimated tax payment deposits. See Estimated tax penalty, below. If the corporation overpaid estimated tax, it may be able to get a quick refund by filing Form 4466, Corporation Application for Quick Refund of Overpayment of Estimated Tax. See the instructions for Schedule J, Part II, line 14, later. Estimated tax penalty. A corporation that does not make estimated tax payments when due may be subject to an underpayment penalty for the period of underpayment. Generally, a corporation is subject to the penalty if its tax liability is $500 or more and it did not timely pay at least the smaller of: Its tax liability for the current year, or Its prior year's tax. 4 Interest and Penalties ! Interest. Interest is charged on taxes paid late even if an extension of time to file is granted. Interest is also charged on penalties imposed for failure to file, negligence, fraud, substantial valuation misstatements, substantial understatements of tax, and reportable transaction understatements from the due date (including extensions) to the date of payment. The interest charge is figured at a rate determined under section 6621. Late filing of return. A corporation that does not file its tax return by the due date, including extensions, may be penalized 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25% of the unpaid tax. The minimum penalty for a return that is over 60 days late is the smaller of the tax due or $135. The penalty will not be imposed if the corporation can show that the failure to file on time was due to reasonable cause. See Caution, above. Late payment of tax. A corporation that does not pay the tax when due generally may be penalized 1 2 of 1% of the unpaid tax for each month or part of a month the tax is not paid, up to a maximum of 25% of the unpaid tax. See Caution, above. Trust fund recovery penalty. This penalty may apply if certain excise, income, social security, and Medicare taxes that must be collected or withheld are not collected or withheld, or these taxes are not paid. These taxes are generally reported on: Form 720, Quarterly Federal Excise Tax Return; Form 941, Employer's QUARTERLY Federal Tax Return; Form 943, Employer's Annual Federal Tax Return for Agricultural Employees; Form 944, Employer's ANNUAL Federal Tax Return; or Form 945, Annual Return of Withheld Federal Income Tax. The trust fund recovery penalty may be imposed on all persons who are determined by the IRS to have been responsible for collecting, accounting for, or paying over these taxes, and who acted Instructions for Form 1120 willfully in not doing so. The penalty is equal to the full amount of the unpaid trust fund tax. See the Instructions for Form 720, Pub. 15 (Circular E), Employer's Tax Guide, or Pub. 51 (Circular A), Agricultural Employer's Tax Guide, for details, including the definition of responsible persons. Other penalties. Other penalties can be imposed for negligence, substantial understatement of tax, reportable transaction understatements, and fraud. See sections 6662, 6662A, and 6663. Accounting Methods Figure taxable income using the method of accounting regularly used in keeping the corporation's books and records. In all cases, the method used must clearly show taxable income. Permissible methods include cash, accrual, or any other method authorized by the Internal Revenue Code. Generally, the following rules apply. For more information, see Pub. 538, Accounting Periods and Methods. A corporation (other than a qualified personal service corporation) must use the accrual method of accounting if its average annual gross receipts exceed $5 million. However, see Nonaccrual experience method for service providers, in the instructions for line 1a. Unless it is a qualifying taxpayer or a qualifying small business taxpayer, a corporation must use the accrual method for sales and purchases of inventory items. See the instructions for Form 1125-A. A corporation engaged in farming must use the accrual method. For exceptions, see section 447. Special rules apply to long-term contracts. See section 460. Dealers in securities must use the mark-to-market accounting method. Dealers in commodities and traders in securities and commodities can elect to use the mark-to-market accounting method. See section 475. Change in accounting method. Generally, the corporation must get IRS consent to change either an overall method of accounting or the accounting treatment of any material item. To do so, the corporation generally must file Form 3115, Application for Change in Accounting Method. See the Instructions for Form 3115 for more information and exceptions, including filing exceptions for qualified small taxpayers and filing exceptions for certain first-year tangible property changes for small business taxpayers. Section 481(a) adjustment. If the corporation's taxable income for the current tax year is figured under a method Instructions for Form 1120 of accounting different from the method used in the preceding tax year, the corporation may have to make an adjustment under section 481(a) to prevent amounts of income or expense from being duplicated or omitted. The section 481(a) adjustment period is generally 1 year for a net negative adjustment and 4 years for a net positive adjustment. However, in some cases, a corporation can elect to modify the section 481(a) adjustment period. The corporation may have to complete the appropriate lines of Form 3115 to make an election. See the instructions for Form 3115 for more information and exceptions. If the net section 481(a) adjustment is positive, report it on Form 1120, line 10, as other income. If the net section 481(a) adjustment is negative, report it on line 26 as a deduction. Accounting Period A corporation must figure its taxable income on the basis of a tax year. A tax year is the annual accounting period a corporation uses to keep its records and report its income and expenses. Generally, corporations can use a calendar year or a fiscal year. Personal service corporations, however, must use a calendar year unless they meet one of the exceptions, discussed later under Personal Service Corporation. Change of tax year. Generally, a corporation, including a personal service corporation, must get the consent of the IRS before changing its tax year by filing Form 1128, Application To Adopt, Change, or Retain a Tax Year. However, exceptions may apply. See the Instructions for Form 1128 and Pub. 538 for more information. Rounding Off to Whole Dollars The corporation can round off cents to whole dollars on its return and schedules. If the corporation does round to whole dollars, it must round all amounts. To round, drop amounts under 50 cents and increase amounts from 50 to 99 cents to the next dollar. For example, $1.39 becomes $1 and $2.50 becomes $3. If two or more amounts must be added to figure the amount to enter on a line, include cents when adding the amounts and round off only the total. Recordkeeping Keep the corporation's records for as long as they may be needed for the administration of any provision of the Internal Revenue Code. Usually, records that support an item of income, deduction, or credit on the return must be kept for 3 years from the date the return is due or 5 filed, whichever is later. Keep records that verify the corporation's basis in property for as long as they are needed to figure the basis of the original or replacement property. The corporation should keep copies of all filed returns. They help in preparing future and amended returns and in the calculation of earnings and profits. Other Forms and Statements That May Be Required Amended return. Use Form 1120X, Amended U.S. Corporation Income Tax Return, to correct a previously filed Form 1120. Reportable transaction disclosure statement. Disclose information for each reportable transaction in which the corporation participated. Form 8886, Reportable Transaction Disclosure Statement, must be filed for each tax year that the federal income tax liability of the corporation is affected by its participation in the transaction. The following are reportable transactions. 1. Any listed transaction, which is a transaction that is the same as or substantially similar to one of the types of transactions that the IRS has determined to be a tax avoidance transaction and identified by notice, regulation, or other published guidance as a listed transaction. 2. Any transaction offered under conditions of confidentiality for which the corporation (or a related party) paid an advisor a fee of at least $250,000. 3. Certain transactions for which the corporation (or a related party) has contractual protection against disallowance of the tax benefits. 4. Certain transactions resulting in a loss of at least $10 million in any single year or $20 million in any combination of years. 5. Any transaction identified by the IRS by notice, regulation, or other published guidance as a \"transaction of interest.\" For more information, see Regulations section 1.6011-4. Also see the Instructions for Form 8886. Penalties. The corporation may have to pay a penalty if it is required to disclose a reportable transaction under section 6011 and fails to properly complete and file Form 8886. Penalties may also apply under section 6707A if the corporation fails to file Form 8886 with its corporate return, fails to provide a copy of Form 8886 to the Office of Tax Shelter Analysis (OTSA), or files a form that fails to include all the information required (or includes incorrect information). Other penalties, such as an accuracy-related penalty under section 6662A, may also apply. See the Instructions for Form 8886 for details on these and other penalties. Reportable transactions by material advisors. Material advisors to any reportable transaction must disclose certain information about the reportable transaction by filing Form 8918, Material Advisor Disclosure Statement, with the IRS. For details, see the Instructions for Form 8918. Transfers to a corporation controlled by the transferor. Every significant transferor (as defined in Regulations section 1.351-3(d)) that receives stock of a corporation in exchange for property in a nonrecognition event must include the statement required by Regulations section 1.351-3(a) on or with the transferor's tax return for the tax year of the exchange. The transferee corporation must include the statement required by Regulations section 1.351-3(b) on or with its return for the tax year of the exchange, unless all the required information is included in any statement(s) provided by a significant transferor that is attached to the same return for the same section 351 exchange. If the transferor or transferee corporation is a controlled foreign corporation, each U.S. shareholder (within the meaning of section 951(b)) must include the required statement on or with its return. Distributions under section 355. Every corporation that makes a distribution of stock or securities of a controlled corporation, as described in section 355 (or so much of section 356 as it relates to section 355), must include the statement required by Regulations section 1.355-5(a) on or with its return for the year of the distribution. A significant distributee (as defined in Regulations section 1.355-5(c)) that receives stock or securities of a controlled corporation must include the statement required by Regulations section 1.355-5(b) on or with its return for the year of receipt. If the distributing or distributee corporation is a controlled foreign corporation, each U.S. shareholder (within the meaning of section 951(b)) must include the statement on or with its return. Dual consolidated losses. If a domestic corporation incurs a dual consolidated loss (as defined in Regulations section 1.1503-2(c)(5)), the corporation (or consolidated group) may need to attach an elective relief agreement and/or an annual certification as provided in Regulations section 1.1503-2(g)(2). Election to reduce basis under section 362(e)(2)(C). If property is transferred to a corporation subject to section 362(e)(2), the transferor and the acquiring corporation may elect, under section 362(e)(2)(C), to reduce the transferor's basis in the stock received instead of reducing the acquiring corporation's basis in the property transferred. Once made, the election is irrevocable. For more information see section 362(e)(2) and Regulations section 1.362-4. If an election is made, a statement must be filed in accordance with Regulations section 1.362-4(d)(3). Annual information statement for elec tions under section 108(i). If the corporation made an election in 2009 or 2010 to defer income from cancellation of debt (COD) in connection with the reacquisition of an applicable debt instrument, the corporation must attach a statement to its return beginning with the tax year following the tax year for which the corporation made the election, and ending the first tax year all income deferred has been included in income. The statement must be labeled \"Section 108(i) Information Statement\" and must clearly identify, for each applicable debt instrument to which an election under section 108(i) applies, the following. 1. Any deferred COD income that is included in income in the current tax year. 2. Any deferred COD income that has been accelerated because of an event described in section 108(i)(5)(D) and must be included in income in the current tax year. Include a description and the date of the acceleration event. 3. Any deferred COD income that has not been included in income in the current or prior tax years. 4. Any deferred original issue discount (OID) deduction allowed as a deduction in the current tax year. 5. Any deferred OID deduction that is allowed as a deduction in the current tax year because of an accelerated event described in section 108(i)(5)(D). 6. Any deferred OID deduction that has not been deducted in the current or prior tax years. In addition, the corporation must annually include a copy of the election statement it filed to make the election to defer the income. For more information regarding the annual information statement, see Rev. Proc. 2009-37, 2009-36 I.R.B. 309. For more information on deferring COD income, see the instructions for line 10. Other forms and statements. See Pub. 542, Corporations, for a list of other forms and statements a corporation may need to file in addition to the forms and statements discussed throughout these instructions. 6 Specific Instructions Period Covered File the 2015 return for calendar year 2015 and fiscal years that begin in 2015 and end in 2016. For a fiscal or short tax year return, fill in the tax year space at the top of the form. if: The 2015 Form 1120 can also be used The corporation has a tax year of less than 12 months that begins and ends in 2016, and The 2016 Form 1120 is not available at the time the corporation is required to file its return. The corporation must show its 2016 tax year on the 2015 Form 1120 and take into account any tax law changes that are effective for tax years beginning after December 31, 2015. Name and Address Enter the corporation's true name (as set forth in the charter or other legal document creating it), address, and EIN on the appropriate lines. Enter the address of the corporation's principal office or place of business. Include the suite, room, or other unit number after the street address. If the post office does not deliver mail to the street address and the corporation has a P.O. box, show the box number instead. Note. Do not use the address of the registered agent for the state in which the corporation is incorporated. For example, if a business is incorporated in Delaware or Nevada and the corporation's principal office is located in Little Rock, AR, the corporation should enter the Little Rock address. If the corporation receives its mail in care of a third party (such as an accountant or an attorney), enter on the street address line \"C/O\" followed by the third party's name and street address or P.O. box. If the corporation has a foreign address, include the city or town, state or province, country, and foreign postal code. Do not abbreviate the country name. Follow the country's practice for entering the name of the state or province and postal code. Item A. Identifying Information Consolidated Return Corporations filing a consolidated return must check Item A, box 1a, and attach Form 851, Affiliations Schedule, and other supporting statements to the return. Also, for the first year a subsidiary corporation is being included in a consolidated return, Instructions for Form 1120 attach Form 1122, Authorization and Consent of Subsidiary Corporation To Be Included in a Consolidated Income Tax Return, to the parent's consolidated return. Attach a separate Form 1122 for each new subsidiary being included in the consolidated return. File supporting statements for each corporation included in the consolidated return. Do not use Form 1120 as a supporting statement. On the supporting statement, use columns to show the following, both before and after adjustments. 1. Items of gross income and deductions. 2. A computation of taxable income. 3. Balance sheets as of the beginning and end of the tax year. 4. A reconciliation of income per books with income per return. 5. A reconciliation of retained earnings. Enter on Form 1120 the totals for each item of income, gain, loss, expense, or deduction, net of eliminating entries for intercompany transactions between corporations within the consolidated group. Attach consolidated balance sheets and a reconciliation of consolidated retained earnings. The corporation does not have to TIP provide the information requested in (3), (4), and (5), above, if its total receipts (line 1a plus lines 4 through 10 on page 1 of the return) and its total assets at the end of the tax year (Schedule L, line 15(d)) are less than $250,000. See Schedule K, question 13. For more information on consolidated returns, see the regulations under section 1502. LifeNonlife Consolidated Return If Item A, box 1a, is checked and the corporation is the common parent of a consolidated group that includes a life-nonlife insurance company, also check box 1b. See Regulations section 1.1502-47(s) for the filing requirements of a life-nonlife consolidated return. Personal Holding Company A personal holding company must check Item A, box 2 and attach Schedule PH (Form 1120), U.S. Personal Holding Company (PHC) Tax. See the Instructions for Schedule PH (Form 1120) for details. Personal Service Corporation If the corporation is a personal service corporation, check Item A, box 3. A personal service corporation is a corporation whose principal activity for the testing period is the performance of Instructions for Form 1120 personal services. The testing period for a tax year is generally the prior tax year unless the corporation has just been formed. Personal services include any activity performed in the fields of accounting, actuarial science, architecture, consulting, engineering, health, law, and the performing arts. The services must be substantially performed by employee-owners. A personal service corporation must use a calendar tax year unless: It elects to use a 52-53-week tax year that ends with reference to the calendar year or tax year elected under section 444; It can establish a business purpose for a different tax year and obtains the approval of the IRS (see the Instructions for Form 1128 and Pub. 538); or It elects under section 444 to have a tax year other than a calendar year. To make the election, use Form 8716, Election To Have a Tax Year Other Than a Required Tax Year. If a corporation makes the section 444 election, its deduction for certain amounts paid to employee-owners may be limited. See Schedule H (Form 1120), Section 280H Limitations for a Personal Service Corporation (PSC), to figure the maximum deduction. If a section 444 election is terminated and the termination results in a short tax year, type or print at the top of the first page of Form 1120 for the short tax year \"SECTION 444 ELECTION TERMINATED.\" Schedule M3 (Form 1120) A corporation with total assets (non-consolidated or consolidated for all corporations included within a tax consolidation group) of $10 million or more on the last day of the tax year must file Schedule M-3 (Form 1120), Net Income (Loss) Reconciliation for Corporations With Total Assets of $10 Million or More, instead of Schedule M-1. A corporation filing Form 1120 that is not required to file Schedule M-3 may voluntarily file Schedule M-3 instead of Schedule M-1. For 2015, corporations that (a) are required to file Schedule M-3 (Form 1120) and have less than $50 million total assets at the end of the tax year, or (b) are not required to file Schedule M-3 (Form 1120) and voluntarily file Schedule M-3 (Form 1120), must either (i) complete Schedule M-3 (Form 1120) entirely or (ii) complete Schedule M-3 (Form 1120) through Part I, and complete Form 1120, Schedule M-1, instead of completing Parts II and III of Schedule M-3 (Form 1120). If the corporation chooses to complete Schedule M-1 instead of completing Parts II and III of Schedule M-3, line 1 of 7 Schedule M-1 must equal line 11 of Part I of Schedule M-3. See the Instructions for Schedule M-3 (Form 1120) for more details. Also, see the instructions for Schedule M-1, later. If you are filing Schedule M-3, check Item A, box 4, to indicate that Schedule M-3 is attached. Item B. Employer Identification Number (EIN) Enter the corporation's EIN. If the corporation does not have an EIN, it must apply for one. An EIN can be applied for: OnlineClick on the Employer ID Numbers link at www.irs.gov/businesses. The EIN is issued immediately once the application information is validated. By faxing or mailing Form SS-4, Application for Employer Identification Number. Corporations located in the United States or U.S. CAUTION possessions can use the online application. Foreign corporations should call 1-267-941-1099 for more information on obtaining an EIN. ! EIN applied for, but not received. If the corporation has not received its EIN by the time the return is due, enter \"Applied For\" and the date the corporation applied in the space for the EIN. However, if the corporation is filing its return electronically, an EIN is required at the time the return is filed. An exception applies to subsidiaries of corporations whose returns are filed with the parent's electronically filed consolidated Form 1120. These subsidiaries should enter \"Applied For\" in the space for the EIN on their returns. The subsidiaries' returns are identified under the parent corporation's EIN. For more information, see the Instructions for Form SS-4. Item D. Total Assets Enter the corporation's total assets (as determined by the accounting method regularly used in keeping the corporation's books and records) at the end of the tax year. If there are no assets at the end of the tax year, enter -0-. If the corporation is required to complete Schedule L, enter on page 1, Item D. Total assets from Schedule L, line 15, column (d). If filing a consolidated return, report total consolidated assets for all corporations joining in the return. Item E. Initial Return, Final Return, Name Change, or Address Change If this is the corporation's first return, check the \"Initial return\" box. If this is the corporation's final return and it will no longer exist, check the \"Final return\" box. If the corporation changed its name since it last filed a return, check the \"Name change\" box. Generally, a corporation also must have amended its articles of incorporation and filed the amendment with the state in which it was incorporated. If the corporation has changed its address since it last filed a return (including a change to an \"in care of\" address), check the \"Address change\" box. Note. If a change in address or responsible party occurs after the return is filed, use Form 8822-B, Change of Address or Responsible Party Business, to notify the IRS. See the instructions for Form 8822-B for details. Income Except as otherwise provided in the Internal Revenue Code, gross income includes all income from whatever source derived. Exception for income from qualifying shipping activities. Gross income does not include income from qualifying shipping activities if the corporation makes an election under section 1354 to be taxed on its notional shipping income (as defined in section 1353) at the highest corporate tax rate (35%). If the election is made, the corporation generally may not claim any loss, deduction, or credit with respect to qualifying shipping activities. A corporation making this election also may elect to defer gain on the disposition of a qualifying vessel. Use Form 8902, Alternative Tax on Qualifying Shipping Activities, to figure the tax. Include the alternative tax on Schedule J, line 9e. Line 1. Gross Receipts or Sales Line 1a. Gross receipts or sales. Enter on line 1a gross receipts or sales from all business operations, except for amounts that must be reported on lines 4 through 10. Special rules apply to certain income, as discussed below. Advance payments. In general, advance payments are reported in the year of receipt. For exceptions to this general rule for corporations that use the accrual method of accounting, see the following. To report income from long-term contracts, see section 460. For special rules for reporting certain advance payments for goods and long-term contracts, see Regulations section 1.451-5. For rules that allow a limited deferral of advance payments beyond the current tax year, see Rev. Proc. 2004-34, 2004-22 I.R.B. 991. For rules for the deferral of advance payments from the sale of certain gift cards, see Rev. Proc. 2011-18, 2011-5 I.R.B. 443, as modified and clarified by Rev. Proc. 2013-29, 2013-33 I.R.B. 141. For information on adopting or changing to a permissible method for reporting advance payments for services and certain goods by an accrual method corporation, see the Instructions for Form 3115. Installment sales. Generally, the installment method cannot be used for dealer dispositions of property. A \"dealer disposition\" is any disposition of: (a) personal property by a person who regularly sells or otherwise disposes of personal property of the same type on the installment plan or (b) real property held for sale to customers in the ordinary course of the taxpayer's trade or business. The restrictions on using the installment method do not apply to the following. Dispositions of property used or produced in the trade or business of farming. Certain dispositions of timeshares and residential lots reported under the installment method for which the corporation elects to pay interest under section 453(I)(3). Enter on line 1a (and carry to line 3), the gross profit on collections from these installment sales. Attach a statement showing the following information for the current and the 3 preceding years: (a) gross sales, (b) cost of goods sold, (c) gross profits, (d) percentage of gross profits to gross sales, (e) amount collected, and (f) gross profit on the amount collected. For sales of timeshares and residential lots reported under the installment method, if the corporation elects to pay interest under section 453(I)(3), the corporation's income tax is increased by the interest payable under section 453(l) (3). Report this addition to