Please help with book-tax reconciliation and IRS form 1120

1. Please work alone - do not work in groups. You can email me or come see me and I will help you. 2. Do not use tax software to prepare the return. If you do, it will hurt you at test time. Work it out by hand and in pencil. 3. I will be available most days to answer questions. Just email me and I will respond as soon as I can, but within 48 hours at the latest. 4. The tax return is due on Wednesday, October 19 at the beginning of class. Be prepared to turn it in as you walk in the door. This paperwork should be stapled in the top left corner. I will not have a stapler in class. If not neatly stapled, you will have an automatic 5 point deduction. 5. Round all numbers to a dollar figure. No decimals. Fifty cents and above, round up. Forty-nine cents and below, round down. Instructions: Please complete the book-tax reconciliation and all required federal corporation income tax return forms for Reba's Retro Design, Inc. for the 2021 tax year based upon the facts presented below. If required information is missing, use reasonable assumptions to fill in the gaps. Reba's Retro Design (RRD) is organized in the state of Alabama as a corporation and is taxed as a "C" corporation with a calendar year-end. RRD operates a furniture company that sells retro furnishings that they manufacture in Dothan, AL. RRD's address employer identification number (EIN), and date of incorporation are as follows: Reba's Retro Design, Inc. 257 West 55th Avenue Dothan, AL36301 EIN-43-9823459 Date Incorporated: March 17, 2014 RRD's address has not changed since its inception. RRD has been rapidly expanding its business. This expansion has required a significant amount of new equipment purchases. RRD sold some of its liquid investments in order to avoid having to take on debt to fund these purchases. Further, RRD invested heavily in its catering business by significantly increasing its advertising budget. RRD and its officers expect that revenue increases from these expenditures will begin next year. RRD is owned by four related shareholders from the same family for the entire year: Reba Baxter and her three children Rachel, Amber and Daniel. None of RRD's shareholders are non-U.S. persons. There are currently 10,000 shares of RRD common stock issued and outstanding (RRD has never issued preferred stock). The shareholders are also employees of RRD and its only corporate officers. The relevant shareholder and officer information for the current year is provided below. Officer compensation is included in Employee Salaries on the income statement. Their personal information is provided below: Reba Baxter 160 West 57th Avenue Dothan, AL 36301 SSN: 356-87-4322 Shares owned 5,508=55% Compensation in 2022$150,000 Rachel Brown 250 Oak Leaf Lane Dothan, AL 36303 SSN: 284-58-4583 Shares owned 1,50%=157 Compensation in 2022$130,000 Harper McDonald 56 Water Way Ozark, AL 36360 SSN: 423-84-2343 Shares owned 1,50|r =15 \% Compensation in 2022$130,000 Daniel Baxter 160 West 57th Avenue Dothan, AL 36303 SSN-487-27-4797 Shares owned 1,50\$ = 15\% Compensation in 2022$130,000 Total 540,000 RRD follows the accrual method of accounting (GAAP) and is not a member of any consolidated or affiliated group of entities. RRD is not audited by a CPA firm and has never had to restate its financial statement information. Supplementary Details: - The dividends received by RRD during the year were paid by Apple, Inc. (RRD owns less than 20% The dividends received by RRD during the year were paid by Appie, inc. (RRD owns less than 20% of Apple, Incis stock). 2800.50=(1400) b) RD - RRD had its sole municipal bond (Dothan City School Bond) redeemed (bought back) in the current year. RRD originally purchased the bonds on February 1, 2017 for $100,000 (no premium or discount paid). The bond was redeemed by the Dothan City Schools on February 1, 2021 for $100,000. Both tax basis and proceeds received on this transaction were reported to RRD on a Form 1099-B. - RRD purchased 200 shares of Apple, Inc, on October 10, 2017 for $100,000 (including commission). On July 10, of the current year, RRD sold the 200 shares of Apple, Inc, for $350 a share (including commission). Both tax basis and proceeds received on this transaction were reported to RRD on a form 1099-B. - During the year, RRD contributed $8,000 to the American Lung Association. - On December 10, RRD paid Madison Advertising $27,500 to design a new advertisement campaign for next year. This money represented half of the total $55,000 contract price. RRD expects that the services will be provided and delivered to RRD on about June 30, 2021. - RRD prepaid an insurance premium of $21,000 in September. The new policy is effective October 1 , 2021 through September 30, 2022. - RRD's regular tax depreciation for the year is correctly calculated as $350,000 before considerinz the ? current year fixed asset additions of $840,000 (see table below). RRD wants to claim the fastest recovery method(s) possible on these asset additions without electing any 179 expensing. - RRD acquired the following new fixed assets from unrelated parties in 2021: - RRD reports employee compensation amounts that remained unpaid at year-end in Accrued Bonuses, Accrued Vacation and Accrued Wages on the balance sheet, as applicable. The table below provides a summary of the balances in these accounts for December 31, 2020 and 2021. - On November 1 , a large insurance company paid RRD a \$100,000 deposit to complete furnishings and design services for a new wing of their building. These services will begin in April 2022. The deposit is fully refundable until January 15,2022 . Thereafter, half of the deposit becomes non-refundable. - Meal expenses were incurred for clients and RRD staff at important meetings where business was conducted. RRD did not incur any entertainment-related expenses in 2021. docs not specty if 1700+5083=(850) - RRD values its inventory at cost and has always used the specific identification method for reporting purposes. The company has never written down any inventory for any reason and the rules of Section 263A (UNICAP) do not apply to RRD. - RRD made the following estimated Federal income tax payments: - April 15", 2021: $2,000 - September 15th,2021:$2,000 - June 15", 2021: $2,000 - December 15th,2021:$1,000=7000 total - If applicable, RRD wants any overpayment refunded. Miscellaneous Information: - RRD did not make any dividend distributions or distributions in excess of current and accumulated earnings and profits during the current year. - RRD does not have any net operating loss carryforward amounts available for the current year. - RRD has never issued publicly offered debt instruments. - RRD is not required to file a Schedule UTP, Uncertain Tax Position Statement. - RRD made several payments during the current year that were required to be reported on Forms 1099 . NEC; all required forms 1099 were filed timely by RRD. - RRD has never disposed of more than 65% (by value) of its assets in a taxable, non-taxable, or taxdeferred transaction. - RRD did not receive any assets in Section 351 transfers during the year. - RRD's average annual gross receipts have never exceeded $26 million annually. Amancial Statements (kept on a GAAP basis): Balance Sheet Liabilities and Shareholders' Equity: Income Statement for the period ending December 31,2021 1. Please work alone - do not work in groups. You can email me or come see me and I will help you. 2. Do not use tax software to prepare the return. If you do, it will hurt you at test time. Work it out by hand and in pencil. 3. I will be available most days to answer questions. Just email me and I will respond as soon as I can, but within 48 hours at the latest. 4. The tax return is due on Wednesday, October 19 at the beginning of class. Be prepared to turn it in as you walk in the door. This paperwork should be stapled in the top left corner. I will not have a stapler in class. If not neatly stapled, you will have an automatic 5 point deduction. 5. Round all numbers to a dollar figure. No decimals. Fifty cents and above, round up. Forty-nine cents and below, round down. Instructions: Please complete the book-tax reconciliation and all required federal corporation income tax return forms for Reba's Retro Design, Inc. for the 2021 tax year based upon the facts presented below. If required information is missing, use reasonable assumptions to fill in the gaps. Reba's Retro Design (RRD) is organized in the state of Alabama as a corporation and is taxed as a "C" corporation with a calendar year-end. RRD operates a furniture company that sells retro furnishings that they manufacture in Dothan, AL. RRD's address employer identification number (EIN), and date of incorporation are as follows: Reba's Retro Design, Inc. 257 West 55th Avenue Dothan, AL36301 EIN-43-9823459 Date Incorporated: March 17, 2014 RRD's address has not changed since its inception. RRD has been rapidly expanding its business. This expansion has required a significant amount of new equipment purchases. RRD sold some of its liquid investments in order to avoid having to take on debt to fund these purchases. Further, RRD invested heavily in its catering business by significantly increasing its advertising budget. RRD and its officers expect that revenue increases from these expenditures will begin next year. RRD is owned by four related shareholders from the same family for the entire year: Reba Baxter and her three children Rachel, Amber and Daniel. None of RRD's shareholders are non-U.S. persons. There are currently 10,000 shares of RRD common stock issued and outstanding (RRD has never issued preferred stock). The shareholders are also employees of RRD and its only corporate officers. The relevant shareholder and officer information for the current year is provided below. Officer compensation is included in Employee Salaries on the income statement. Their personal information is provided below: Reba Baxter 160 West 57th Avenue Dothan, AL 36301 SSN: 356-87-4322 Shares owned 5,508=55% Compensation in 2022$150,000 Rachel Brown 250 Oak Leaf Lane Dothan, AL 36303 SSN: 284-58-4583 Shares owned 1,50%=157 Compensation in 2022$130,000 Harper McDonald 56 Water Way Ozark, AL 36360 SSN: 423-84-2343 Shares owned 1,50|r =15 \% Compensation in 2022$130,000 Daniel Baxter 160 West 57th Avenue Dothan, AL 36303 SSN-487-27-4797 Shares owned 1,50\$ = 15\% Compensation in 2022$130,000 Total 540,000 RRD follows the accrual method of accounting (GAAP) and is not a member of any consolidated or affiliated group of entities. RRD is not audited by a CPA firm and has never had to restate its financial statement information. Supplementary Details: - The dividends received by RRD during the year were paid by Apple, Inc. (RRD owns less than 20% The dividends received by RRD during the year were paid by Appie, inc. (RRD owns less than 20% of Apple, Incis stock). 2800.50=(1400) b) RD - RRD had its sole municipal bond (Dothan City School Bond) redeemed (bought back) in the current year. RRD originally purchased the bonds on February 1, 2017 for $100,000 (no premium or discount paid). The bond was redeemed by the Dothan City Schools on February 1, 2021 for $100,000. Both tax basis and proceeds received on this transaction were reported to RRD on a Form 1099-B. - RRD purchased 200 shares of Apple, Inc, on October 10, 2017 for $100,000 (including commission). On July 10, of the current year, RRD sold the 200 shares of Apple, Inc, for $350 a share (including commission). Both tax basis and proceeds received on this transaction were reported to RRD on a form 1099-B. - During the year, RRD contributed $8,000 to the American Lung Association. - On December 10, RRD paid Madison Advertising $27,500 to design a new advertisement campaign for next year. This money represented half of the total $55,000 contract price. RRD expects that the services will be provided and delivered to RRD on about June 30, 2021. - RRD prepaid an insurance premium of $21,000 in September. The new policy is effective October 1 , 2021 through September 30, 2022. - RRD's regular tax depreciation for the year is correctly calculated as $350,000 before considerinz the ? current year fixed asset additions of $840,000 (see table below). RRD wants to claim the fastest recovery method(s) possible on these asset additions without electing any 179 expensing. - RRD acquired the following new fixed assets from unrelated parties in 2021: - RRD reports employee compensation amounts that remained unpaid at year-end in Accrued Bonuses, Accrued Vacation and Accrued Wages on the balance sheet, as applicable. The table below provides a summary of the balances in these accounts for December 31, 2020 and 2021. - On November 1 , a large insurance company paid RRD a \$100,000 deposit to complete furnishings and design services for a new wing of their building. These services will begin in April 2022. The deposit is fully refundable until January 15,2022 . Thereafter, half of the deposit becomes non-refundable. - Meal expenses were incurred for clients and RRD staff at important meetings where business was conducted. RRD did not incur any entertainment-related expenses in 2021. docs not specty if 1700+5083=(850) - RRD values its inventory at cost and has always used the specific identification method for reporting purposes. The company has never written down any inventory for any reason and the rules of Section 263A (UNICAP) do not apply to RRD. - RRD made the following estimated Federal income tax payments: - April 15", 2021: $2,000 - September 15th,2021:$2,000 - June 15", 2021: $2,000 - December 15th,2021:$1,000=7000 total - If applicable, RRD wants any overpayment refunded. Miscellaneous Information: - RRD did not make any dividend distributions or distributions in excess of current and accumulated earnings and profits during the current year. - RRD does not have any net operating loss carryforward amounts available for the current year. - RRD has never issued publicly offered debt instruments. - RRD is not required to file a Schedule UTP, Uncertain Tax Position Statement. - RRD made several payments during the current year that were required to be reported on Forms 1099 . NEC; all required forms 1099 were filed timely by RRD. - RRD has never disposed of more than 65% (by value) of its assets in a taxable, non-taxable, or taxdeferred transaction. - RRD did not receive any assets in Section 351 transfers during the year. - RRD's average annual gross receipts have never exceeded $26 million annually. Amancial Statements (kept on a GAAP basis): Balance Sheet Liabilities and Shareholders' Equity: Income Statement for the period ending December 31,2021