I was hoping to get help with a tax return about a hypothetical company. There is a file for help and another file with a couple of forms. Concerning page 2 in the forms, only schedule M-1 needs to be completed and not the balance sheet. I will attach the documents, and please feel free to ask questions. Thank you for your time and I will make sure to compensate appropriately.

1120 U.S. Corporation Income Tax Return Form Department of the Treasury Internal Revenue Service A Check if: 1a Consolidated return (attach Form 851) . b Lifeonlife consolidated return . . . 2 Personal holding co. (attach Sch. PH) . . For calendar year 2016 or tax year beginning a OMB No. 1545-0123 , 2016, ending TYPE OR PRINT Name B Employer identification number Number, street, and room or suite no. If a P.O. box, see instructions. C Date incorporated City or town, state, or province, country, and ZIP or foreign postal code D Total assets (see instructions) 3 Personal service corp. (see instructions) . . 4 Schedule M-3 attached 1a Income Deductions (See instructions for limitations on deductions.) $ Initial return E Check if: (1) . . . . . . . . . . . 1a 2 3 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1b . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1c 2 3 4 5 6 7 Interest . . Gross rents . Gross royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 6 7 8 9 10 Capital gain net income (attach Schedule D (Form 1120)) . . . . Net gain or (loss) from Form 4797, Part II, line 17 (attach Form 4797) Other income (see instructionsattach statement) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 9 10 11 12 13 Total income. Add lines 3 through 10 . . . . . . . . Compensation of officers (see instructionsattach Form 1125-E) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 15 16 Salaries and wages (less employment credits) Repairs and maintenance . . . . . . Bad debts . . . . . . . . . . . Rents . . . . . . . . . . . . 11 12 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 15 16 17 18 19 Taxes and licenses . . Interest . . . . . Charitable contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 18 19 20 21 22 Depreciation from Form 4562 not claimed on Form 1125-A or elsewhere on return (attach Form 4562) . Depletion . . . . . . . . . . . . . . . . . . . . . . . . . . . . Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 21 22 23 24 25 Pension, profit-sharing, etc., plans . . . . . . . . Employee benefit programs . . . . . . . . . . Domestic production activities deduction (attach Form 8903) . . . . 23 24 25 26 27 28 Other deductions (attach statement) . . . . . . . . . . . . . . . . . . . . . Total deductions. Add lines 12 through 26 . . . . . . . . . . . . . . . . . . . Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line 11. 29a b Net operating loss deduction (see instructions) . Special deductions (Schedule C, line 20) . . . c 31 32 33 34 35 36 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Add lines 29a and 29b . . . . . . . . . . . . . Taxable income. Subtract line 29c from line 28. See instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . a a 26 27 28 a 29a 29b . . . . . . . . . . . . . . . . 29c 30 Total tax (Schedule J, Part I, line 11) . . . . . . . . . . . . . . . . Total payments and refundable credits (Schedule J, Part II, line 21) . . . . . . . Estimated tax penalty. See instructions. Check if Form 2220 is attached . . . . . Amount owed. If line 32 is smaller than the total of lines 31 and 33, enter amount owed . . . . . . . . . . . . . . . . 31 32 33 34 Overpayment. If line 32 is larger than the total of lines 31 and 33, enter amount overpaid Enter amount from line 35 you want: Credited to 2017 estimated tax a . . . . . Refunded a a . . 35 36 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. Date Signature of officer Paid Preparer Use Only Print/Type preparer's name Preparer's signature F F Sign Here . . . . Address change (4) . . . . . . . . . Name change (3) . 30 Gross receipts or sales . Final return (2) Returns and allowances . . . . . Balance. Subtract line 1b from line 1a Cost of goods sold (attach Form 1125-A) Gross profit. Subtract line 2 from line 1c Dividends (Schedule C, line 19) . . b c Tax, Refundable Credits, and Payments 2016 , 20 Information about Form 1120 and its separate instructions is at www.irs.gov/form1120. May the IRS discuss this return with the preparer shown below? See instructions. Yes No Title Date PTIN Check if self-employed Firm's name a Firm's EIN Firm's address a Phone no. For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11450Q a Form 1120 (2016) Page 5 Form 1120 (2016) Schedule L Beginning of tax year Balance Sheets per Books (a) Assets 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 17 18 19 20 21 22 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: a Preferred stock . . . . b Common stock . . . . Additional paid-in capital . . . . . . . Retained earningsAppropriated (attach statement) Retained earningsUnappropriated . . . Adjustments to shareholders' equity (attach statement) Less cost of treasury stock . . . . . . Total liabilities and shareholders' equity . . End of tax year (b) (c) (d) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) Liabilities and Shareholders' Equity 23 24 25 26 27 28 Schedule M-1 ( ) ( ) Reconciliation of Income (Loss) per Books With Income per Return Note: The corporation may be required to file Schedule M-3. See instructions. 1 Net income (loss) per books . . . . . . 2 Federal income tax per books . . . . . 3 Excess of capital losses over capital gains 4 Income subject to tax not recorded on books this year (itemize): 5 Expenses recorded on books this year not deducted on this return (itemize): a b c 6 4 Income recorded on books this year not included on this return (itemize): Tax-exempt interest $ 8 Deductions on this return not charged against book income this year (itemize): a Depreciation . . $ b Charitable contributions $ 9 10 Add lines 7 and 8 . . . . . . Income (page 1, line 28)line 6 less line 9 . Depreciation . . . . $ Charitable contributions . $ Travel and entertainment . $ Add lines 1 through 5 . Schedule M-2 1 2 3 7 . . . . . . . Analysis of Unappropriated Retained Earnings per Books (Line 25, Schedule L) Balance at beginning of year Net income (loss) per books . Other increases (itemize): Add lines 1, 2, and 3 . . . . . . . . . . . . . . . . . . 5 6 7 8 Distributions: a Cash . b Stock . c Property Other decreases (itemize): . . . . . . . . . Add lines 5 and 6 . . . . . . Balance at end of year (line 4 less line 7) Form 1120 (2016) Form 4562 Depreciation and Amortization a Attach a Information to your tax return. about Form 4562 and its separate instructions is at www.irs.gov/form4562. Name(s) shown on return 1 2 3 4 5 Business or activity to which this form relates Attachment Sequence No. 179 Identifying number Election To Expense Certain Property Under Section 179 Note: If you have any listed property, complete Part V before you complete Part I. Maximum amount (see instructions) . . . . . . . . . . . . . . . . . . Total cost of section 179 property placed in service (see instructions) . . . . . . Threshold cost of section 179 property before reduction in limitation (see instructions) . Reduction in limitation. Subtract line 3 from line 2. If zero or less, enter -0- . . . . . Dollar limitation for tax year. Subtract line 4 from line 1. If zero or less, enter -0-. If separately, see instructions . . . . . . . . . . . . . . . . . . . . (a) Description of property 6 2016 (Including Information on Listed Property) Department of the Treasury Internal Revenue Service (99) Part I OMB No. 1545-0172 (b) Cost (business use only) . . . . . . . . . . . . married . . . . . . . . . . . filing . . 1 2 3 4 5 (c) Elected cost 7 Listed property. Enter the amount from line 29 . . . . . . . . . 7 8 Total elected cost of section 179 property. Add amounts in column (c), lines 6 and 7 . . . . . . 8 9 Tentative deduction. Enter the smaller of line 5 or line 8 . . . . . . . . . . . . . . . . 9 10 Carryover of disallowed deduction from line 13 of your 2015 Form 4562 . . . . . . . . . . . 10 11 Business income limitation. Enter the smaller of business income (not less than zero) or line 5 (see instructions) 11 12 Section 179 expense deduction. Add lines 9 and 10, but don't enter more than line 11 . . . . . . 12 13 13 Carryover of disallowed deduction to 2017. Add lines 9 and 10, less line 12 a Note: Don't use Part II or Part III below for listed property. Instead, use Part V. Part II Special Depreciation Allowance and Other Depreciation (Don't include listed property.) (See instructions.) 14 Special depreciation allowance for qualified property (other than listed property) placed in service during the tax year (see instructions) . . . . . . . . . . . . . . . . . . . . . . 14 15 Property subject to section 168(f)(1) election . . . . . . . . . . . . . . . . . . . . 15 16 Other depreciation (including ACRS) . . . . . . . . . . . . . . . . . . . . . . 16 Part III MACRS Depreciation (Don't include listed property.) (See instructions.) Section A 17 17 MACRS deductions for assets placed in service in tax years beginning before 2016 . . . . . . . 18 If you are electing to group any assets placed in service during the tax year into one or more general asset accounts, check here . . . . . . . . . . . . . . . . . . . . . . a Section BAssets Placed in Service During 2016 Tax Year Using the General Depreciation System (a) Classification of property (b) Month and year placed in service (c) Basis for depreciation (business/investment use onlysee instructions) 19a b c d e f g h 3-year property 5-year property 7-year property 10-year property 15-year property 20-year property 25-year property Residential rental property i Nonresidential real property (d) Recovery period 25 yrs. 27.5 yrs. 27.5 yrs. 39 yrs. (e) Convention (f) Method MM MM MM MM S/L S/L S/L S/L S/L (g) Depreciation deduction Section CAssets Placed in Service During 2016 Tax Year Using the Alternative Depreciation System S/L 20a Class life 12 yrs. S/L b 12-year 40 yrs. MM S/L c 40-year Part IV Summary (See instructions.) 21 Listed property. Enter amount from line 28 . . . . . . . . . . . . . . . . . . . . 22 Total. Add amounts from line 12, lines 14 through 17, lines 19 and 20 in column (g), and line 21. Enter here and on the appropriate lines of your return. Partnerships and S corporationssee instructions . 23 For assets shown above and placed in service during the current year, enter the portion of the basis attributable to section 263A costs . . . . . . . 23 For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 12906N 21 22 Form 4562 (2016) Tax return preparation guidance 1) Begin by formulating an income statement (GAAP basis) using the income and expense information provided. 2) Calculate tax depreciation amounts using the information from the problem and complete form 4562 with your depreciation numbers. Do not worry about Parts I and II (the company has elected out of section 179 and bonus depreciation). For Part III, note that line 17 is the sum of MACRS depreciation for assets put into service before the tax return year. You should fill out the lines under line 19 for assets placed into service during the tax return year. 3) Calculate book-tax differences for each income and expense item and formulate a \"tax\" income statement. The book-tax differences will reconcile the pretax book income down to the taxable income (like what we did in Chapter 6) and this reconciliation and the book-tax differences will go on the M-1. Do not worry about calculating tax expense per the books and disregard that line item on the M-1. 4) Put your completed tax income statement on page 1 of the 1120. Note that taxable income per the M-1 should tie to line 30 of the 1120. Tax return information You own a t-shirt screen printing company called Back the Pack. Back the Pack operates as a regular Corporation under Subchapter C of the Internal Revenue Code. Back the Pack incorporated on April 1, 2014 and business began on June 1, 2014. The company owns the building that the store is located in and all of the equipment that the business uses. The tax year for the Corporation is the calendar year and it is on the accrual method. The tax identification number for Back the Pack is 12345678. Do not forget to fill out the Corporation's name and relevant information at the top of the tax return forms. Please complete the 2016 Form 4562 - Depreciation and Amortization. You do not need to complete Parts I, II, and V of the form because you should assume you are not electing the Section 179 deduction, you have elected out of bonus depreciation, and you have no listed property for the 2016 tax year. You will compute MACRS depreciation in Parts III and IV and, if any, amortization in Part VI. You will also need to complete Page 1 of the 2016 Form 1120 - U.S. Corporation Income Tax Return. You will only need to complete through line 31. Also, complete the Schedule M-1 Reconciliation of Income (Loss) per Books with Income per Return (on page 5 of the 1120). This is the itemized book-tax differences (\"BTD\"). Put each BTD separately in the correct section. These forms are found on the IRS website (www.irs.gov) but I have included the required forms in Moodle for your convenience. Note that the depreciation and amortization amounts computed on Form 4562 flow to Form 1120 page 1. The Form 1120 page 1 is the tax income statement that includes all tax amounts for income and deductions. The Modified Schedule M-1 starts with net income per books and adjusts the book revenues and expenses to tax amounts using book-tax differences. Line 28 of the Form 1120 should tie to line 10 on the Schedule M-1. Use the appendix in your textbook to compute the total corporate tax on line 31 of the Form 1120. Do not worry about including any non-numerical information that is not provided with the assignment. The company owns the following assets: Land purchased on 5/1/2014 for $180,000. The land was placed in service on 6/1/2014. Building purchased on 5/1/2014 for $350,000. The building was placed in service on 6/1/2014. Screen printing machinery purchased and placed in service on 6/1/2014 for $85,000. Office equipment purchased and placed in service on 1/1/2015 for $90,000 Additional screen printing machinery purchased and placed in service on 2/1/2016 for $425,000 Computer equipment purchased and placed in service on 3/1/2016 for $35,000 Warehouse purchased and placed in service on 9/1/2016 for $300,000 Back the Pack uses straight line depreciation for book purposes. Book depreciation expense is $95,600 in 2016. In addition to depreciation expense, you had the following book income and expenses in 2016: Income from t-shirt sales of $1,150,000. Related cost of goods sold of $200,000 Muni bond interest income of $12,000 Salaries and wages of $250,000 A fine paid to the City of Raleigh of $6,000 Advertising costs of $7,000 Meals and entertainment expenses of $14,000 Increases in the Allowance for Bad Debts account equaled $13,000 and specific account write-offs totaled $15,000 Back the Pack received payments for consulting services in 2015 and 2016 as follows: $6,000 in 2015. Two-quarters of the consulting services related to this payment were performed in 2015, one-quarter were performed in 2016, and the remainder will be performed in 2017. $10,000 in 2016. One-fifth of the consulting services related to this payment were performed in 2016. The remaining services will be performed in 2017