Page 1 of 3 I. Title: Corporate Taxation II. Introduction After proving yourself as a tax researcher and capable of handling the most challenging individual tax clients, Debbie has promoted you to the Corporate Taxation Department. Congratulations! She encourages you to spend considerable time reading corporate tax laws and reviewing files for the firms corporate tax clients. To begin, Debbie assigns you to one of the firms oldest clients; the Cleveland American Manufacturing Company. Members of the firm refer to the Cleveland American Manufacturing Company by the acronym CAMCO. At reminds you that she is available to help you succeed at Tax Pros CPA Firm and to contact her if you have any questions. You begin by reviewing the tax file Debbie had delivered to your office. CAMCOs tax file includes the following relevant facts: Its legal name is the Cleveland American Manufacturing Company Incorporated as a regular C corporation on July 1, 2010 Address: 175 Vine Street, Cleveland, Ohio 44111. EIN Number: 34-123456 It manufactures fishing gear Its Business Activity Code is 339900 for "other manufacturing Key Financial Information Total assets $15,000,000 Sales 3,000,000 Net Income per Books 840,000 Inventory, beginning 200,000 Inventory, ending 200,000 Purchases 1,200,000 Cost of Goods Sold 1,200,000 Inventory is valued at Cost using the FIFO inventory cost flow method All non-inventory expenses are reported using the Cash basis method CAMCO is owned by a single shareholder, Jan Goetz. Her Social Security number is 333-55-3333. Last year, Jans salary as President was $300,000, salaries and wages paid to other CAMCO employees totaled $450,000. In addition, CAMCO paid $50,000 to rent its manufacturing plant, $100,000 to advertise, and $90,000 for repairs and maintenance.

Additional information included in CAMCOs file for last year: CAMCO made four estimated tax payments of $25,000 last year. Overpaid taxes by $14,000 o Carried this $14,000 forward as a credit, which is still available for use this year CAMCO contributed a truck it had used in its business for the past 4 years to St. Raphael Church. The church planned to use the truck to deliver food and clothing donations to needy families. The truck had a: o Current adjusted basis of $20,000, and a o Fair market value of $50,000 . Depreciation on fixed assets, all from assets placed into service in prior years, was $120,000 CAMCO owns 10% of Emerald Woods Golf Inc., a domestic corporation, which paid CAMCO $300,000 in dividends last year CAMCO also owns 40% of Catawba Vineyards, Inc. (I.D., 34-654321), which is a domestic U.S. (Ohio) corporation popular as a Midwest destination winery, restaurant, and resort. Catawba Vineyards is especially known for its sweet, Lake Erie Catawba wines. o CAMCO received $300,000 in dividends from Catawba Vineyards last year. o CAMCO can answer "no" to all questions on Form 1120, Schedule K, except question 5a. CAMCO uses the calendar year for tax filing. It is not part of any affiliated group of companies. III. Steps to Completion 1. Prepare last year's Form 1120 for the Cleveland American Manufacturing Company 2. On the last page, prepare the Form M-1. Note, do not prepare Form L or Form M-2 3. Prepare all forms needed as support for Form 1120, including: i. Form 1125-A: Cost of Goods Sold, ii. Form 1125-E: Compensation of Officers, iii. Form 4562: Depreciation and Amortization, and iv. Other forms, if needed