Prepare a corporate tax return including schedules 1120, 1125-A, 1125-E, G, 4562, D.

schedules in the correct sequence. Information 1. The corporation operates a retail women's clothing store. It rents store space in a small shopping center. 2. In ProConnect, select create tax return and then on the Client Form, click on add new. Choose Business at the top of the form, then enter items 3-7 below in the Add New Client form. 3. For the name of the corporation, use your last name followed by Corporation." For example, a student named Taylor Black would use "Black Corporation as the corporation's name. EN The corporation's 9-digit employer identification number is 42-3456789. 4. 5. The corporation's address is 3478 Hemlock Drive, Cedar Falls, IA 50613. (No need to enter an email address or phone number.) SAVE 6. Next, Click on Tax Return in the side menu bar. Choose Client Information and enter additional information. 7. It uses a calendar year for its tax year. It was incorporated on April 3, 2016. * The corporation uses the accrual method of accounting for both financial and tax purposes. It does not maintain a deferred income tax account. 9. The 5385 federal income tax refund from 2018 (see balance sheet) was received by check. It was not applied to the year 2019 estimated tax payments. 10. During 2019, the corporation paid timely $4,000 in estimated federal taxes ($1,000 each quarter) Il. You are the CEO of the corporation and own 70% of the common stock. Your social security number is 520-45-6789. You devote 100% of your time to the business. Your 2018 compensation was $60,000. You sign the Form 1120 return. 12. Pat Larson (SSN 520-12-3456) owns the remaining 30% of the stock, is the corporation's COO, and devotes 100% of his time to the business. His 2019.compensation was also $60,000. Pat is not related to you 13. The corporation's financial statements appear on pages 3-4 of this handout. Use these statements to prepare Form 1120 and its supporting schedules and forms. Book income will differ from taxable income because of differences between the two accounting systems. 14. Inventory is valued at cost and is accounted for under the FIFO method. The corporation is not subject to the uniform capitalization rules of Section 263A. There were no changes in determining inventory quantities, cost, or valuations during the year. 15. The dividend income was from less than 20% owned domestic corporations. 16. The corporation sold 115 shares of Gorp, Inc. on November 13, 2019 for a net sales price of $7.993. The securities were purchased on October 18, 2018 for $11,553. The sale was reported on Form 1099.B. and the stock's basis was reported to the IRS. The corporation had no capital gains in 2017 or 2018 17. The charitable contributions were paid in cash. 18. Meals expense is subject to the 50% limit. 19. The life insurance expense was for insurance on your life with the corporation as the beneficiary 20. The corporation distributed $23,100 to you and $9.900 to Pat Larson as cash dividends during 2018 It reported the distributions on Form 1099-DIV. 21. There are no capital loss, NOL, or charitable contribution carryovers from prior years 22. The corporation's 2018 federal tax liability was $3.815. Enter this amount directly on line 4 of Form 2220 if ProConnect adds this form to the return 23. Treat the retained camnings account as "unappropriated." Financial Statements Income Statement: Gross sales Less returns and allowances 611.534 22.181 589,353 42,774 318.998 361,772 47.128 Net sales Cost of goods sold: Beginning inventory Purchases Goods available for sale Ending inventory Gross profit Dividend income Municipal bond interest income Loss from sale of securities Total income Expenses: Advertising Charitable contributions Depreciation Entertainment Interest Legal and professional Life insurance premium Meals Officer compensation Payroll taxes 314,644 274.709 2,968 1,312 3.560 275,429 2,480 8,022 4,989 596 3,872 4,100 1,473 398 120,000 12,115 Rent 10,800 Salaries and wages 53,618 State income tax 2,053 Telephone 582 Utilities 3.317 Net income before federal tax Federal income tax expense Net income after federal tax *Use the total tax amount from line 31 of Form 1120, page 1. 228.413 47,014 Balance Sheets: 12.01.18 18,828 11,895 42,774 12-31-19 14,306 13,917 47,128 385 28,573 28,535 34,591 28,573 16,982 58.895 11.033) Cash Accounts receivable Inventory Federal income tax refund Municipal bonds Marketable securities Depreciable assets Accumulated depreciation Total Assets Accounts payable Notes payable current Federal income tax payable Notes payable-long term Common stock Retained earnings Total Liabilities & Equity 159,537 23,216 4,000 26,433 4,000 34,000 40,000 38.000 40,000 54.321 159,537 Depreciation Schedule For financial accounting (book) purposes, the corporation uses the straight-line method of depreciation. It uses MACRS for tax purposes, and it always elects to take the maximum Section 179 expense. A depreciation schedule appears below. For this project, you only need to enter the furniture purchased in 2018 in ProConnect. Do this using an "Asset Entry Worksheet." You do not need to enter any information regarding the two assets purchased in 2016. They are fully depreciated for tax purposes. 2016 2017 2018 Item Date Cost Book Tax Book Tax Book Tax Office Furniture Computers 4/07/16 6/28/16 5/13/18 28,111 1,757 28,111 2,343 6,480 648 6,480 1.296 24,304 0 0 0 | 60,895 | 2,405 | 34,591 | 3,639 0 2,3430 01,2960 0 1,350 04989? Office Furniture Total schedules in the correct sequence. Information 1. The corporation operates a retail women's clothing store. It rents store space in a small shopping center. 2. In ProConnect, select create tax return and then on the Client Form, click on add new. Choose Business at the top of the form, then enter items 3-7 below in the Add New Client form. 3. For the name of the corporation, use your last name followed by Corporation." For example, a student named Taylor Black would use "Black Corporation as the corporation's name. EN The corporation's 9-digit employer identification number is 42-3456789. 4. 5. The corporation's address is 3478 Hemlock Drive, Cedar Falls, IA 50613. (No need to enter an email address or phone number.) SAVE 6. Next, Click on Tax Return in the side menu bar. Choose Client Information and enter additional information. 7. It uses a calendar year for its tax year. It was incorporated on April 3, 2016. * The corporation uses the accrual method of accounting for both financial and tax purposes. It does not maintain a deferred income tax account. 9. The 5385 federal income tax refund from 2018 (see balance sheet) was received by check. It was not applied to the year 2019 estimated tax payments. 10. During 2019, the corporation paid timely $4,000 in estimated federal taxes ($1,000 each quarter) Il. You are the CEO of the corporation and own 70% of the common stock. Your social security number is 520-45-6789. You devote 100% of your time to the business. Your 2018 compensation was $60,000. You sign the Form 1120 return. 12. Pat Larson (SSN 520-12-3456) owns the remaining 30% of the stock, is the corporation's COO, and devotes 100% of his time to the business. His 2019.compensation was also $60,000. Pat is not related to you 13. The corporation's financial statements appear on pages 3-4 of this handout. Use these statements to prepare Form 1120 and its supporting schedules and forms. Book income will differ from taxable income because of differences between the two accounting systems. 14. Inventory is valued at cost and is accounted for under the FIFO method. The corporation is not subject to the uniform capitalization rules of Section 263A. There were no changes in determining inventory quantities, cost, or valuations during the year. 15. The dividend income was from less than 20% owned domestic corporations. 16. The corporation sold 115 shares of Gorp, Inc. on November 13, 2019 for a net sales price of $7.993. The securities were purchased on October 18, 2018 for $11,553. The sale was reported on Form 1099.B. and the stock's basis was reported to the IRS. The corporation had no capital gains in 2017 or 2018 17. The charitable contributions were paid in cash. 18. Meals expense is subject to the 50% limit. 19. The life insurance expense was for insurance on your life with the corporation as the beneficiary 20. The corporation distributed $23,100 to you and $9.900 to Pat Larson as cash dividends during 2018 It reported the distributions on Form 1099-DIV. 21. There are no capital loss, NOL, or charitable contribution carryovers from prior years 22. The corporation's 2018 federal tax liability was $3.815. Enter this amount directly on line 4 of Form 2220 if ProConnect adds this form to the return 23. Treat the retained camnings account as "unappropriated." Financial Statements Income Statement: Gross sales Less returns and allowances 611.534 22.181 589,353 42,774 318.998 361,772 47.128 Net sales Cost of goods sold: Beginning inventory Purchases Goods available for sale Ending inventory Gross profit Dividend income Municipal bond interest income Loss from sale of securities Total income Expenses: Advertising Charitable contributions Depreciation Entertainment Interest Legal and professional Life insurance premium Meals Officer compensation Payroll taxes 314,644 274.709 2,968 1,312 3.560 275,429 2,480 8,022 4,989 596 3,872 4,100 1,473 398 120,000 12,115 Rent 10,800 Salaries and wages 53,618 State income tax 2,053 Telephone 582 Utilities 3.317 Net income before federal tax Federal income tax expense Net income after federal tax *Use the total tax amount from line 31 of Form 1120, page 1. 228.413 47,014 Balance Sheets: 12.01.18 18,828 11,895 42,774 12-31-19 14,306 13,917 47,128 385 28,573 28,535 34,591 28,573 16,982 58.895 11.033) Cash Accounts receivable Inventory Federal income tax refund Municipal bonds Marketable securities Depreciable assets Accumulated depreciation Total Assets Accounts payable Notes payable current Federal income tax payable Notes payable-long term Common stock Retained earnings Total Liabilities & Equity 159,537 23,216 4,000 26,433 4,000 34,000 40,000 38.000 40,000 54.321 159,537 Depreciation Schedule For financial accounting (book) purposes, the corporation uses the straight-line method of depreciation. It uses MACRS for tax purposes, and it always elects to take the maximum Section 179 expense. A depreciation schedule appears below. For this project, you only need to enter the furniture purchased in 2018 in ProConnect. Do this using an "Asset Entry Worksheet." You do not need to enter any information regarding the two assets purchased in 2016. They are fully depreciated for tax purposes. 2016 2017 2018 Item Date Cost Book Tax Book Tax Book Tax Office Furniture Computers 4/07/16 6/28/16 5/13/18 28,111 1,757 28,111 2,343 6,480 648 6,480 1.296 24,304 0 0 0 | 60,895 | 2,405 | 34,591 | 3,639 0 2,3430 01,2960 0 1,350 04989? Office Furniture Total