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XYZ is a calendar-year corporation that began business on January 1, 2020. For the year, it reported the following information in its current-year audited income statement. Notes with important tax information are provided below. Use Exhibit 16-6. XYZ corp. Income statement For current year Revenue from sales Cost of Goods Sold Gross profit Book Income $ 40,000,000 (27,000,000) $ 13,000,000 300,0001 20,0002 (4,000) 3,0003 50,000 $ 13, 369,000 Other income: Income from investment in corporate stock Interest income Capital gains (losses) Gain or loss from disposition of fixed assets Miscellaneous income Gross Income Expenses : Compensation Stock option compensation Advertising Repairs and Maintenance Rent Bad Debt expense Depreciation Warranty expenses Charitable donations Meals Goodwill impairment Organizational expenditures Other expenses Total expenses Income before taxes Provision for income taxes Net Income after taxes (7,500,000) (200,000)5 (1,350,000) (75,000) (22,000) (41,000 6 (1,400,000)7 (70,0008 (500,000 (18,000) (30,000 10 (44,000 11 (140,000 12 $(11,390,000) $ 1,979,000 (400,000) 13 $ 1,579,000 1. XYZ owns 30 percent of the outstanding Hobble Corp. (HC) stock. Hobble Corp. reported $1,000,000 of income for the year. XYZ accounted for its investment in HC under the equity method, and it recorded its pro rata share of HC's earnings for the year. HC also distributed a $200,000 dividend to XYZ. 2. Of the $20,000 interest income, $5,000 was from a City of Seattle bond, $7,000 was from a Tacoma City bond, $6,000 was from a fully taxable corporate bond, and the remaining $2,000 was from a money market account. 3. This gain is from equipment that XYZ purchased in February and sold in December (i.e., it does not qualify as $1231 gain). 4. This includes total officer compensation of $2,500,000 (no one officer received more than $1,000,000 compensation). 5. This amount is the portion of incentive stock option compensation that was expensed during the year (recipients are officers). 6.XYZ actually wrote off $27,000 of its accounts receivable as uncollectible. 7. Tax depreciation was $1,900,000. 8. In the current year, XYZ did not make any actual payments on warranties it provided to customers. 9. XYZ made $500,000 of cash contributions to qualified charities during the year. 10. On July 1 of this year XYZ acquired the assets of another business. In the process, it acquired $300,000 of goodwill. At the end of the year, XYZ wrote off $30,000 of the goodwill as impaired. 11. XYZ expensed all of its organizational expenditures for book purposes. XYZ expensed the maximum amount of organizational expenditures allowed for tax purposes. 12. The other expenses do not contain any items with book-tax differences. 13. This is an estimated tax provision (federal tax expense) for the year. Assume that XYZ is not subject to state income taxes. Estimated tax information: XYZ made four equal estimated tax payments totaling $360,000 ($90,000 per quarter). For purposes of estimated tax liabilities, assume XYZ was in existence in 2019 and that in 2019 it reported a tax liability of $500,000. During 2020, XYZ determined its taxable income at the end of each of the four quarters as follows: Quarter-end First Second Third Cumulative taxable income (loss) $ 400,000 $ 1,100,000 $ 1,400,000 Finally, assume that XYZ is not a large corporation for purposes of estimated tax calculations. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.) d. Complete XYZ's Form 1120, page 1. Form 1120 2019 Deductions (See instructions for limitations on deductions.) U.S. Corporation Income Tax Return OMB No. 1545-0123 For calendar year 2019 or tax year beginning 2019, ending 20 Department of the Treasury Internal Revenue Service Go to www.lrs.gov/Form1120 for instructions and the latest information. A Check if: Name B Employer identification number 1a Consolidated return (attach Form 851) TYPE b Lifeonile canso OR Number, street, and room or suite no. If a P.O. box, see instructions. dated retum. C Date incorporated 2 Personal holding co. PRINT (atlach Sch.PH) City or town, state or province, country, and ZIP or foreign postal code D Total assets (sce instructions) 3 Personal service corp Isee instructions $ . 4 Schedula M-3 attached OE Check it: (1) Initial return (2) Final retum (3) Name change (4) Address change 1a Gross receipts or sales 1a b Returns and allowances. 1b Balance. Subtract line 1b from line 1a 1c 2 Cost of goods sold (attach Form 1125-A). 2 3 Gross profit. Subtract line 2 from line 1c 3 4 4 Dividends and inclusions (Schedule C, line 23) 4 4 4 5 Interest 5 5 6 Gross rents 6 0 7 Gross royalties 7 8 Capital gain net income (attach Schedule D (Form 1120) 8 9 9 Net gain or loss) from Form 4797, Part II, line 17 (attach Form 4797) 9 10 Other income (see instructions-attach statement) 10 11 Total income. Add lines 3 through 10 11 12 Compensation of officers (see instructions-attach Form 1125-E) 12 13 Salaries and wages (less employment credits) 13 14 Repairs and maintenance Densive and 14 45 15 Bad debts Bad 15 16 Rents 16 17 Taxes and licenses 17 18 Interest (see instructions) 18 19 Charitable contributions 19 20 Depreciation from Form 4562 not claimed on Form 1125-A or elsewhere on return (attach Form 4562) 20 .. 21 Depletion 21 22 Advertising 22 23 Pension, profit-sharing, etc., plans 23 24 Employee benefit programs 24 DE 25 Reserved for future use 25 26 Other deductions (attach statement) 26 27 Total deductions. Add lines 12 through 26 27 28 Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line 11. 28 29a Net operating loss deduction (see instructions) 29a b Special deductions (Schedule C, line 24). 29b Add lines 29a and 29b 29c 30 Taxable income. Subtract line 29c from line 28. See instructions 30 31 Total tax (Schedule J, Part I, line 11) 31 32 2019 net 965 tax liability paid (Schedule J, Part II, line 12) 32 33 Total payments, credits, and section 965 net tax liability (Schedule J, Part II, line 23) 33 34 Estimated tax penalty. See instructions. Check if Form 2220 is attached 34 35 Amount owed. If line 33 is smaller than the total of lines 31, 32, and 34, enter amount owed 35 36 Overpayment. If line 33 is larger than the total of lines 31, 32, and 34, enter amount overpaid 36 37 Enter amount from line 36 you want: Credited to 2020 estimated tax Refunded 37 Under penalties of perjury, I declare that I have examined this retum, including accompartying schedules and statements, and to the best of my knowledge and belief, it is true, correct, Sign and complete. Declaration of preparer father than taxpayer) is based on al information of which preparer has any knowledge. May the IRS discuss this return Here with the preparer shown below? See instructions. Yes No Signature of officer Date Title Print/Type preparer's name Preparer's signature Date PTIN Paid Check self-employed Preparer Firm's EIN Firm's address Phone no. For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 114500 Form 1120 (2019) Tax, Refundable Credits Use Only Firm's name (a) Dividends and inclusions (b) % Page 2 (c) Special deductions (a) x (b) Form 1120 (2019) Schedule C Dividends, Inclusions, and Special Deductions (see instructions) 1 Dividends from less-than-20%-owned domestic corporations (other than debt-financed stock). 2 Dividends from 20%-or-more-owned domestic corporations (other than debt-financed stock) 50 65 3 Dividends on certain debt-financed stock of domestic and foreign corporations instructions 4 Dividends on certain preferred stock of less-than-20%-owned public utilities 23.3 5 Dividends on certain preferred stock of 20%-or-more-owned public utilities. 26.7 6 Dividends from less-than-20%-owned foreign corporations and certain FSCs 50 7 Dividends from 20%-or-more-owned foreign corporations and certain FSCs 65 8 Dividends from wholly owned foreign subsidiaries 100 9 instructions 10 Subtotal. Add lines 1 through 8. See instructions for limitations Dividends from domestic corporations received by a small business investment company operating under the Small Business Investment Act of 1958 100 11 Dividends from affiliated group members 100 12 100 13 Dividends from certain FSCS Foreign-source portion of dividends received from a specified 10%-owned foreign corporation (excluding hybrid dividends) (see instructions) Dividends from foreign corporations not included on line 3, 6, 7, 8, 11, 12, or 13 (including any hybrid dividends) 100 14 natactos 100 15 Section 965(a) inclusion 16a Subpart F inclusions derived from the sale by a controlled foreign corporation (CFC) of the stock of a lower-tier foreign corporation treated as a dividend (attach Form(s) 5471) (see instructions) ) b Subpart F inclusions derived from hybrid dividends of tiered corporations (attach Form(s) 5471) (see instructions) Other inclusions from CFCs under subpart F not included on line 15, 16a, 16b, or 17 (attach Form(s) 5471) (see instructions) .............. c 17 Global Intangible Low-Taxed Income (GILTI) (attach Form(s) 5471 and Form 8992) 18 Gross-up for foreign taxes deemed paid 19 IC-DISC and former DISC dividends not included on line 1, 2, or 3 20 Other dividends 21 Deduction for dividends paid on certain preferred stock of public utilities 22 23 Section 250 deduction (attach Form 8993) Total dividends and inclusions. Add column (a), lines 9 through 20. Enter here and on page 1, line 4 Total special deductions. Add column (c), lines 9 through 22. Enter here and on page 1, line 295 24 Form 1120 (2019) Page 3 2 3 4 6 7 8 e Form 1120 (2019) Schedule J Tax Computation and Payment (see instructions) Part I-Tax Computation TAA 1 Check if the corporation is a member of a controlled group (attach Schedule (Form 1120)). See instructions 2 Income tax. See instructions 3 Base erosion minimum tax amount (attach Form 8991) 4 Add lines 2 and 3. 5a Foreign tax credit (attach Form 1118) 5a b Credit from Form 8834 (see instructions) 5b General business credit (attach Form 3800) 56 d Credit for prior year minimum tax (attach Form 8827) 5d Bond credits from Form 8912 5e 6 Total credits. Add lines 5a through 5e 7 Subtract line 6 from line 4 4 8 Personal holding company tax (attach Schedule PH (Form 11201) 9a Recapture of investment credit (attach Form 4255) 9a b Recapture of low-income housing credit (attach Form 8611) 9b Interest due under the look back method - completed long-term contracts (attach Form 8697).. 9c d Interest due under the look back method-income forecast method (attach Form 8866) 9d Alternative tax on qualifying shipping activities (attach Form 8902) 9e f Other (see instructions-attach statement) 9f 10 Total. Add lines 9a through 9f . 11 Total tax. Add lines 7, 8, and 10. Enter here and on page 1, line 31 Part II-Section 965 Payments (see instructions) 12 2019 net 965 tax liability paid from Form 965-B, Part II, column (k), line 3. Enter here and on page 1, line 32 Part III-Payments, Refundable Credits, and Section 965 Net Tax Liability 13 2018 overpayment credited to 2019 " 14 2019 estimated tax payments 15 2019 refund applied for on Form 4466 16 Combine lines 13, 14, and 15 17 Tax deposited with Form 7004 18 Withholding (see instructions) 19 Total payments. Add lines 16, 17, and 18 20 Refundable credits from: 24 Form 2439 20a 4400 b Form 4136 20b Form 8827, line 5c 20c d Other (attach statement-see instructions) 20d 21 Total credits. Add lines 20a through 20d. 22 2019 net 965 tax liability from Form 965-B, Part I, column (d), line 3. See instructions 23 Total payments, credits, and section 965 net tax liability. Add lines 19, 21, and 22. Enter here and on page 1, line 33 10 11 12 13 14 15 16 17 18 19 21 22 23 Form 1120 (2019) Page 4 Yes No Form 1120 (2019) Schedule K Other Information (see instructions) 1 Check accounting method: a Cash b Accrual c Other (specify) 2 See the instructions and enter the: a Business activity code no. b Business activity Product or service 3 Is the corporation a subsidiary in an affiliated group or a parent-subsidiary controlled group? If "Yes," enter name and EIN of the parent corporation 4 4 At the end of the tax year: b 5 Did any foreign or domestic corporation, partnership (including any entity treated as a partnership), trust, or tax-exempt organization own directly 20% or more, or own, directly or indirectly, 50% or more of the total voting power of all classes of the corporation's stock entitled to vote? If "Yes," complete Part 1 of Schedule G (Form 1120) (attach Schedule G). Did any individual or estate own directly 20% or more, or own, directly or indirectly, 50% or more of the total voting power of all classes of the corporation's stock entitled to vote? If "Yes," complete Part II of Schedule G (Form 1120) (attach Schedule G) At the end of the tax year, did the corporation: Own directly 20% or more, or own, directly or indirectly, 50% or more of the total voting power of all classes of stock entitled to vote of any foreign or domestic corporation not included on Form 851, Affiliations Schedule? For rules of constructive ownership, see instructions, If "Yes," complete through (iv) below. (ii) Employer (iv) Percentage (i) Name of Corporation Identification Number til) Country of Owned in Voting (if any) Incorporation Stock a b Own directly an interest of 20% or more, or own, directly or indirectly, an interest of 50% or more in any foreign or domestic partnership (including an entity treated as a partnership) or in the beneficial interest of a trust? For rules of constructive ownership, see instructions. If "Yes," complete through (iv) below. (ii) Employer O Name of Entity (iv) Maximum Identification Number (iii) Country of Percentage Owned in (if any) Organization Profit, Loss, or Capital 6 7 During this tax year, did the corporation pay dividends (other than stock dividends and distributions in exchange for stock) in excess of the corporation's current and accumulated earnings and profits? See sections 301 and 316 If "Yes," file Form 5452, Corporate Report of Nondividend Distributions. See the instructions for Form 5452. If this is a consolidated return, answer here for the parent corporation and on Form 851 for each subsidiary. At any time during the tax year, did one foreign person own, directly or indirectly, at least 25% of the total voting power of all classes of the corporation's stock entitled to vote or at least 25% of the total value of all classes of the corporation's stock? For rules of attribution, see section 318. If "Yes," enter: w (a) Percentage owned and (b) Owner's country " ----------- (c) The corporation may have to file Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business. Enter the number of Forms 5472 attached Check this box if the corporation issued publicly offered debt instruments with original issue discount. If checked, the corporation may have to file Form 8281, Information Return for Publicly Offered Original Issue Discount Instruments. Enter the amount of tax-exempt interest received or accrued during the tax year $ Enter the number of shareholders at the end of the tax year (if 100 or fewer) If the corporation has an NOL for the tax year and is electing to forego the carryback period, check here (see instructions) If the corporation is filing a consolidated return, the statement required by Regulations section 1.1502-21(b)(3) must be attached or the election will not be valid. Enter the available NOL carryover from prior tax years (do not reduce it by any deduction reported on page 1, line 29a.) S Form 1120 (2019) 8 9 10 11 12 Page 5 No 14 18 19 Form 1120 (2019) Schedule K Other Information (continued from page 4) 13 Are the corporation's total receipts (page 1, line 1a, plus lines 4 through 10) for the tax year and its total assets at the end of the Yes tax year less than $250,000? If "Yes," the corporation is not required to complete Schedules L, M-1, and M-2. Instead, enter the total amount of cash distributions and the book value of property distributions (other than cash) made during the tax years Is the corporation required to file Schedule UTP (Form 1120), Uncertain Tax Position Statement? See instructions If "Yes," complete and attach Schedule UTP. 15a Did the corporation make any payments in 2019 that would require it to file Form(s) 1099? bf "Yes," did or will the corporation file required Fom(s) 1099?. 16 During this tax year, did the corporation have an 80%-or-more change in ownership, including a change due to redemption of its own stock? 17 During or subsequent to this tax year, but before the filing of this return, did the corporation dispose of more than 65% (by value) of its assets in a taxable, non-taxable, or tax deferred transaction? Did the corporation receive assets in a section 351 transfer in which any of the transferred assets had a fair market basis or fair market value of more than $1 million? ........ During the corporation's tax year, did the corporation make any payments that would require it to file Forms 1042 and 1042-S under chapter 3 (sections 1441 through 1464) or chapter 4 (Sections 1471 through 1474) of the Code? . Is the corporation operating on a cooperative basis?. 21 During the tax year, did the corporation pay or accrue any interest or royalty for which the deduction is not allowed under section 267A7 See instructions. ......... If "Yes," enter the total amount of the disallowed deductions $ Does the corporation have gross receipts of at least 500 million in any of the 3 preceding tax years? (See sections 59Ale)(2) and (3)) ...... If "Yes," complete and attach Form 8991 Did the corporation have an election under section 1630) for any real property trade or business or any farming business in effect during the tax year? See instructions .............. Does the corporation satisfy one or more of the following? See instructions a The corporation owns a pass-through entity with current, or prior year carryover, excess business interest expense. The corporation's aggregate average annual gross receipts (determined under section 448(c) for the 3 tax years preceding the current tax year are more than $26 million and the corporation has business interest expense. The corporation is a tax shelter and the corporation has business interest expense. If "Yes," to any, complete and attach Form 8990. Is the corporation attaching Form 8996 to certify as a Qualified Opportunity Fund?. If "Yes" enter amount from Form 8996, line 14 Form 1120 (2019) 20 22 23 24 b 25 Form 1120 (2019) Page 6 Schedule L Balance Sheets per Books Beginning of tax year End of tax year Assets (a) (b) (c) (d) 1 Cash 2a Trade notes and accounts receivable b Less allowance for bad debts 3 Inventories 4 U.S. government obligations 5 Tax-exempt securities (see instructions) 6 Other current assets (attach statement) 7 Loans to shareholders 8 8 Mortgage and real estate loans 9 Other investments (attach statement) 10a Buildings and other depreciable assets b Less accumulated depreciation K 11a Depletable assets b Less accumulated depletion 12 Land (net of any amortization) 13a Intangible assets (amortizable only) b Less accumulated amortization. 14 Other assets (attach statement) . 15 Total assets Lishiliti Liabilities and Shareholders' Equity 16 Accounts payable 17 Mortgages, notes, bonds payable in less than 1 year 18 Other current liabilities (attach statement) 19 Loans from shareholders. 20 Mortgages, notes, bonds payable in 1 year or more 21 Other liabilities (attach statement) 22 Capital stock: a Preferred stock b Common stock 23 Additional paid-in capital. 24 Retained earings - Appropriated (attach statement) 25 Retained earnings-Unappropriated 26 Adjustments to shareholders' equity (attach statement) 27 Less cost of treasury stock . 28 Total liabilities and shareholders' equity 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..... 7 Income recorded on books this year 2 Federal income tax per books not included on this return itemize): 3 Excess of capital losses over capital gains Tax-exempt interest S 4 Income subject to tax not recorded on books this year (itemize): 8 Deductions on this return not charged 5 Expenses recorded on books this year not against book income this year itemize): deducted on this return (itemize): a Depreciation $ Depreciation $ b Charitable contributions $ b Charitable contributions $ C Travel and entertainment. S 9 Add lines 7 and 8. 6 Add lines 1 through 10 Income (page 1, line 28) - line 6 less line 9 Schedule M-2 Analysis of Unappropriated Retained Earnings per Books (Line 25, Schedule L) 1 Balance at beginning of year 5 Distributions: a Cash . 2 Net income (loss) per books b Stock 3 Other increases (itemize): c Property 6 Other decreases (itemize): ): 7 Add lines 5 and 6 Add lines 1, 2, and 3 8 Balance at end of year (line 4 less line 71 Form 1120 (2019) a 4 XYZ is a calendar-year corporation that began business on January 1, 2020. For the year, it reported the following information in its current-year audited income statement. Notes with important tax information are provided below. Use Exhibit 16-6. XYZ corp. Income statement For current year Revenue from sales Cost of Goods Sold Gross profit Book Income $ 40,000,000 (27,000,000) $ 13,000,000 300,0001 20,0002 (4,000) 3,0003 50,000 $ 13, 369,000 Other income: Income from investment in corporate stock Interest income Capital gains (losses) Gain or loss from disposition of fixed assets Miscellaneous income Gross Income Expenses : Compensation Stock option compensation Advertising Repairs and Maintenance Rent Bad Debt expense Depreciation Warranty expenses Charitable donations Meals Goodwill impairment Organizational expenditures Other expenses Total expenses Income before taxes Provision for income taxes Net Income after taxes (7,500,000) (200,000)5 (1,350,000) (75,000) (22,000) (41,000 6 (1,400,000)7 (70,0008 (500,000 (18,000) (30,000 10 (44,000 11 (140,000 12 $(11,390,000) $ 1,979,000 (400,000) 13 $ 1,579,000 1. XYZ owns 30 percent of the outstanding Hobble Corp. (HC) stock. Hobble Corp. reported $1,000,000 of income for the year. XYZ accounted for its investment in HC under the equity method, and it recorded its pro rata share of HC's earnings for the year. HC also distributed a $200,000 dividend to XYZ. 2. Of the $20,000 interest income, $5,000 was from a City of Seattle bond, $7,000 was from a Tacoma City bond, $6,000 was from a fully taxable corporate bond, and the remaining $2,000 was from a money market account. 3. This gain is from equipment that XYZ purchased in February and sold in December (i.e., it does not qualify as $1231 gain). 4. This includes total officer compensation of $2,500,000 (no one officer received more than $1,000,000 compensation). 5. This amount is the portion of incentive stock option compensation that was expensed during the year (recipients are officers). 6.XYZ actually wrote off $27,000 of its accounts receivable as uncollectible. 7. Tax depreciation was $1,900,000. 8. In the current year, XYZ did not make any actual payments on warranties it provided to customers. 9. XYZ made $500,000 of cash contributions to qualified charities during the year. 10. On July 1 of this year XYZ acquired the assets of another business. In the process, it acquired $300,000 of goodwill. At the end of the year, XYZ wrote off $30,000 of the goodwill as impaired. 11. XYZ expensed all of its organizational expenditures for book purposes. XYZ expensed the maximum amount of organizational expenditures allowed for tax purposes. 12. The other expenses do not contain any items with book-tax differences. 13. This is an estimated tax provision (federal tax expense) for the year. Assume that XYZ is not subject to state income taxes. Estimated tax information: XYZ made four equal estimated tax payments totaling $360,000 ($90,000 per quarter). For purposes of estimated tax liabilities, assume XYZ was in existence in 2019 and that in 2019 it reported a tax liability of $500,000. During 2020, XYZ determined its taxable income at the end of each of the four quarters as follows: Quarter-end First Second Third Cumulative taxable income (loss) $ 400,000 $ 1,100,000 $ 1,400,000 Finally, assume that XYZ is not a large corporation for purposes of estimated tax calculations. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.) d. Complete XYZ's Form 1120, page 1. Form 1120 2019 Deductions (See instructions for limitations on deductions.) U.S. Corporation Income Tax Return OMB No. 1545-0123 For calendar year 2019 or tax year beginning 2019, ending 20 Department of the Treasury Internal Revenue Service Go to www.lrs.gov/Form1120 for instructions and the latest information. A Check if: Name B Employer identification number 1a Consolidated return (attach Form 851) TYPE b Lifeonile canso OR Number, street, and room or suite no. If a P.O. box, see instructions. dated retum. C Date incorporated 2 Personal holding co. PRINT (atlach Sch.PH) City or town, state or province, country, and ZIP or foreign postal code D Total assets (sce instructions) 3 Personal service corp Isee instructions $ . 4 Schedula M-3 attached OE Check it: (1) Initial return (2) Final retum (3) Name change (4) Address change 1a Gross receipts or sales 1a b Returns and allowances. 1b Balance. Subtract line 1b from line 1a 1c 2 Cost of goods sold (attach Form 1125-A). 2 3 Gross profit. Subtract line 2 from line 1c 3 4 4 Dividends and inclusions (Schedule C, line 23) 4 4 4 5 Interest 5 5 6 Gross rents 6 0 7 Gross royalties 7 8 Capital gain net income (attach Schedule D (Form 1120) 8 9 9 Net gain or loss) from Form 4797, Part II, line 17 (attach Form 4797) 9 10 Other income (see instructions-attach statement) 10 11 Total income. Add lines 3 through 10 11 12 Compensation of officers (see instructions-attach Form 1125-E) 12 13 Salaries and wages (less employment credits) 13 14 Repairs and maintenance Densive and 14 45 15 Bad debts Bad 15 16 Rents 16 17 Taxes and licenses 17 18 Interest (see instructions) 18 19 Charitable contributions 19 20 Depreciation from Form 4562 not claimed on Form 1125-A or elsewhere on return (attach Form 4562) 20 .. 21 Depletion 21 22 Advertising 22 23 Pension, profit-sharing, etc., plans 23 24 Employee benefit programs 24 DE 25 Reserved for future use 25 26 Other deductions (attach statement) 26 27 Total deductions. Add lines 12 through 26 27 28 Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line 11. 28 29a Net operating loss deduction (see instructions) 29a b Special deductions (Schedule C, line 24). 29b Add lines 29a and 29b 29c 30 Taxable income. Subtract line 29c from line 28. See instructions 30 31 Total tax (Schedule J, Part I, line 11) 31 32 2019 net 965 tax liability paid (Schedule J, Part II, line 12) 32 33 Total payments, credits, and section 965 net tax liability (Schedule J, Part II, line 23) 33 34 Estimated tax penalty. See instructions. Check if Form 2220 is attached 34 35 Amount owed. If line 33 is smaller than the total of lines 31, 32, and 34, enter amount owed 35 36 Overpayment. If line 33 is larger than the total of lines 31, 32, and 34, enter amount overpaid 36 37 Enter amount from line 36 you want: Credited to 2020 estimated tax Refunded 37 Under penalties of perjury, I declare that I have examined this retum, including accompartying schedules and statements, and to the best of my knowledge and belief, it is true, correct, Sign and complete. Declaration of preparer father than taxpayer) is based on al information of which preparer has any knowledge. May the IRS discuss this return Here with the preparer shown below? See instructions. Yes No Signature of officer Date Title Print/Type preparer's name Preparer's signature Date PTIN Paid Check self-employed Preparer Firm's EIN Firm's address Phone no. For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 114500 Form 1120 (2019) Tax, Refundable Credits Use Only Firm's name (a) Dividends and inclusions (b) % Page 2 (c) Special deductions (a) x (b) Form 1120 (2019) Schedule C Dividends, Inclusions, and Special Deductions (see instructions) 1 Dividends from less-than-20%-owned domestic corporations (other than debt-financed stock). 2 Dividends from 20%-or-more-owned domestic corporations (other than debt-financed stock) 50 65 3 Dividends on certain debt-financed stock of domestic and foreign corporations instructions 4 Dividends on certain preferred stock of less-than-20%-owned public utilities 23.3 5 Dividends on certain preferred stock of 20%-or-more-owned public utilities. 26.7 6 Dividends from less-than-20%-owned foreign corporations and certain FSCs 50 7 Dividends from 20%-or-more-owned foreign corporations and certain FSCs 65 8 Dividends from wholly owned foreign subsidiaries 100 9 instructions 10 Subtotal. Add lines 1 through 8. See instructions for limitations Dividends from domestic corporations received by a small business investment company operating under the Small Business Investment Act of 1958 100 11 Dividends from affiliated group members 100 12 100 13 Dividends from certain FSCS Foreign-source portion of dividends received from a specified 10%-owned foreign corporation (excluding hybrid dividends) (see instructions) Dividends from foreign corporations not included on line 3, 6, 7, 8, 11, 12, or 13 (including any hybrid dividends) 100 14 natactos 100 15 Section 965(a) inclusion 16a Subpart F inclusions derived from the sale by a controlled foreign corporation (CFC) of the stock of a lower-tier foreign corporation treated as a dividend (attach Form(s) 5471) (see instructions) ) b Subpart F inclusions derived from hybrid dividends of tiered corporations (attach Form(s) 5471) (see instructions) Other inclusions from CFCs under subpart F not included on line 15, 16a, 16b, or 17 (attach Form(s) 5471) (see instructions) .............. c 17 Global Intangible Low-Taxed Income (GILTI) (attach Form(s) 5471 and Form 8992) 18 Gross-up for foreign taxes deemed paid 19 IC-DISC and former DISC dividends not included on line 1, 2, or 3 20 Other dividends 21 Deduction for dividends paid on certain preferred stock of public utilities 22 23 Section 250 deduction (attach Form 8993) Total dividends and inclusions. Add column (a), lines 9 through 20. Enter here and on page 1, line 4 Total special deductions. Add column (c), lines 9 through 22. Enter here and on page 1, line 295 24 Form 1120 (2019) Page 3 2 3 4 6 7 8 e Form 1120 (2019) Schedule J Tax Computation and Payment (see instructions) Part I-Tax Computation TAA 1 Check if the corporation is a member of a controlled group (attach Schedule (Form 1120)). See instructions 2 Income tax. See instructions 3 Base erosion minimum tax amount (attach Form 8991) 4 Add lines 2 and 3. 5a Foreign tax credit (attach Form 1118) 5a b Credit from Form 8834 (see instructions) 5b General business credit (attach Form 3800) 56 d Credit for prior year minimum tax (attach Form 8827) 5d Bond credits from Form 8912 5e 6 Total credits. Add lines 5a through 5e 7 Subtract line 6 from line 4 4 8 Personal holding company tax (attach Schedule PH (Form 11201) 9a Recapture of investment credit (attach Form 4255) 9a b Recapture of low-income housing credit (attach Form 8611) 9b Interest due under the look back method - completed long-term contracts (attach Form 8697).. 9c d Interest due under the look back method-income forecast method (attach Form 8866) 9d Alternative tax on qualifying shipping activities (attach Form 8902) 9e f Other (see instructions-attach statement) 9f 10 Total. Add lines 9a through 9f . 11 Total tax. Add lines 7, 8, and 10. Enter here and on page 1, line 31 Part II-Section 965 Payments (see instructions) 12 2019 net 965 tax liability paid from Form 965-B, Part II, column (k), line 3. Enter here and on page 1, line 32 Part III-Payments, Refundable Credits, and Section 965 Net Tax Liability 13 2018 overpayment credited to 2019 " 14 2019 estimated tax payments 15 2019 refund applied for on Form 4466 16 Combine lines 13, 14, and 15 17 Tax deposited with Form 7004 18 Withholding (see instructions) 19 Total payments. Add lines 16, 17, and 18 20 Refundable credits from: 24 Form 2439 20a 4400 b Form 4136 20b Form 8827, line 5c 20c d Other (attach statement-see instructions) 20d 21 Total credits. Add lines 20a through 20d. 22 2019 net 965 tax liability from Form 965-B, Part I, column (d), line 3. See instructions 23 Total payments, credits, and section 965 net tax liability. Add lines 19, 21, and 22. Enter here and on page 1, line 33 10 11 12 13 14 15 16 17 18 19 21 22 23 Form 1120 (2019) Page 4 Yes No Form 1120 (2019) Schedule K Other Information (see instructions) 1 Check accounting method: a Cash b Accrual c Other (specify) 2 See the instructions and enter the: a Business activity code no. b Business activity Product or service 3 Is the corporation a subsidiary in an affiliated group or a parent-subsidiary controlled group? If "Yes," enter name and EIN of the parent corporation 4 4 At the end of the tax year: b 5 Did any foreign or domestic corporation, partnership (including any entity treated as a partnership), trust, or tax-exempt organization own directly 20% or more, or own, directly or indirectly, 50% or more of the total voting power of all classes of the corporation's stock entitled to vote? If "Yes," complete Part 1 of Schedule G (Form 1120) (attach Schedule G). Did any individual or estate own directly 20% or more, or own, directly or indirectly, 50% or more of the total voting power of all classes of the corporation's stock entitled to vote? If "Yes," complete Part II of Schedule G (Form 1120) (attach Schedule G) At the end of the tax year, did the corporation: Own directly 20% or more, or own, directly or indirectly, 50% or more of the total voting power of all classes of stock entitled to vote of any foreign or domestic corporation not included on Form 851, Affiliations Schedule? For rules of constructive ownership, see instructions, If "Yes," complete through (iv) below. (ii) Employer (iv) Percentage (i) Name of Corporation Identification Number til) Country of Owned in Voting (if any) Incorporation Stock a b Own directly an interest of 20% or more, or own, directly or indirectly, an interest of 50% or more in any foreign or domestic partnership (including an entity treated as a partnership) or in the beneficial interest of a trust? For rules of constructive ownership, see instructions. If "Yes," complete through (iv) below. (ii) Employer O Name of Entity (iv) Maximum Identification Number (iii) Country of Percentage Owned in (if any) Organization Profit, Loss, or Capital 6 7 During this tax year, did the corporation pay dividends (other than stock dividends and distributions in exchange for stock) in excess of the corporation's current and accumulated earnings and profits? See sections 301 and 316 If "Yes," file Form 5452, Corporate Report of Nondividend Distributions. See the instructions for Form 5452. If this is a consolidated return, answer here for the parent corporation and on Form 851 for each subsidiary. At any time during the tax year, did one foreign person own, directly or indirectly, at least 25% of the total voting power of all classes of the corporation's stock entitled to vote or at least 25% of the total value of all classes of the corporation's stock? For rules of attribution, see section 318. If "Yes," enter: w (a) Percentage owned and (b) Owner's country " ----------- (c) The corporation may have to file Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business. Enter the number of Forms 5472 attached Check this box if the corporation issued publicly offered debt instruments with original issue discount. If checked, the corporation may have to file Form 8281, Information Return for Publicly Offered Original Issue Discount Instruments. Enter the amount of tax-exempt interest received or accrued during the tax year $ Enter the number of shareholders at the end of the tax year (if 100 or fewer) If the corporation has an NOL for the tax year and is electing to forego the carryback period, check here (see instructions) If the corporation is filing a consolidated return, the statement required by Regulations section 1.1502-21(b)(3) must be attached or the election will not be valid. Enter the available NOL carryover from prior tax years (do not reduce it by any deduction reported on page 1, line 29a.) S Form 1120 (2019) 8 9 10 11 12 Page 5 No 14 18 19 Form 1120 (2019) Schedule K Other Information (continued from page 4) 13 Are the corporation's total receipts (page 1, line 1a, plus lines 4 through 10) for the tax year and its total assets at the end of the Yes tax year less than $250,000? If "Yes," the corporation is not required to complete Schedules L, M-1, and M-2. Instead, enter the total amount of cash distributions and the book value of property distributions (other than cash) made during the tax years Is the corporation required to file Schedule UTP (Form 1120), Uncertain Tax Position Statement? See instructions If "Yes," complete and attach Schedule UTP. 15a Did the corporation make any payments in 2019 that would require it to file Form(s) 1099? bf "Yes," did or will the corporation file required Fom(s) 1099?. 16 During this tax year, did the corporation have an 80%-or-more change in ownership, including a change due to redemption of its own stock? 17 During or subsequent to this tax year, but before the filing of this return, did the corporation dispose of more than 65% (by value) of its assets in a taxable, non-taxable, or tax deferred transaction? Did the corporation receive assets in a section 351 transfer in which any of the transferred assets had a fair market basis or fair market value of more than $1 million? ........ During the corporation's tax year, did the corporation make any payments that would require it to file Forms 1042 and 1042-S under chapter 3 (sections 1441 through 1464) or chapter 4 (Sections 1471 through 1474) of the Code? . Is the corporation operating on a cooperative basis?. 21 During the tax year, did the corporation pay or accrue any interest or royalty for which the deduction is not allowed under section 267A7 See instructions. ......... If "Yes," enter the total amount of the disallowed deductions $ Does the corporation have gross receipts of at least 500 million in any of the 3 preceding tax years? (See sections 59Ale)(2) and (3)) ...... If "Yes," complete and attach Form 8991 Did the corporation have an election under section 1630) for any real property trade or business or any farming business in effect during the tax year? See instructions .............. Does the corporation satisfy one or more of the following? See instructions a The corporation owns a pass-through entity with current, or prior year carryover, excess business interest expense. The corporation's aggregate average annual gross receipts (determined under section 448(c) for the 3 tax years preceding the current tax year are more than $26 million and the corporation has business interest expense. The corporation is a tax shelter and the corporation has business interest expense. If "Yes," to any, complete and attach Form 8990. Is the corporation attaching Form 8996 to certify as a Qualified Opportunity Fund?. If "Yes" enter amount from Form 8996, line 14 Form 1120 (2019) 20 22 23 24 b 25 Form 1120 (2019) Page 6 Schedule L Balance Sheets per Books Beginning of tax year End of tax year Assets (a) (b) (c) (d) 1 Cash 2a Trade notes and accounts receivable b Less allowance for bad debts 3 Inventories 4 U.S. government obligations 5 Tax-exempt securities (see instructions) 6 Other current assets (attach statement) 7 Loans to shareholders 8 8 Mortgage and real estate loans 9 Other investments (attach statement) 10a Buildings and other depreciable assets b Less accumulated depreciation K 11a Depletable assets b Less accumulated depletion 12 Land (net of any amortization) 13a Intangible assets (amortizable only) b Less accumulated amortization. 14 Other assets (attach statement) . 15 Total assets Lishiliti Liabilities and Shareholders' Equity 16 Accounts payable 17 Mortgages, notes, bonds payable in less than 1 year 18 Other current liabilities (attach statement) 19 Loans from shareholders. 20 Mortgages, notes, bonds payable in 1 year or more 21 Other liabilities (attach statement) 22 Capital stock: a Preferred stock b Common stock 23 Additional paid-in capital. 24 Retained earings - Appropriated (attach statement) 25 Retained earnings-Unappropriated 26 Adjustments to shareholders' equity (attach statement) 27 Less cost of treasury stock . 28 Total liabilities and shareholders' equity 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..... 7 Income recorded on books this year 2 Federal income tax per books not included on this return itemize): 3 Excess of capital losses over capital gains Tax-exempt interest S 4 Income subject to tax not recorded on books this year (itemize): 8 Deductions on this return not charged 5 Expenses recorded on books this year not against book income this year itemize): deducted on this return (itemize): a Depreciation $ Depreciation $ b Charitable contributions $ b Charitable contributions $ C Travel and entertainment. S 9 Add lines 7 and 8. 6 Add lines 1 through 10 Income (page 1, line 28) - line 6 less line 9 Schedule M-2 Analysis of Unappropriated Retained Earnings per Books (Line 25, Schedule L) 1 Balance at beginning of year 5 Distributions: a Cash . 2 Net income (loss) per books b Stock 3 Other increases (itemize): c Property 6 Other decreases (itemize): ): 7 Add lines 5 and 6 Add lines 1, 2, and 3 8 Balance at end of year (line 4 less line 71 Form 1120 (2019) a 4