Prepare a Form 1120 for Pet Kingdom for tax year 2013.

11/1/2015 Print Preview transactions reported in their tax return. Make necessary assumptions for information not given in the problem but needed to complete the return. Chapter E: Practice Set AssignmentsComprehensive Tax Return Problems Problem 3C Corporation (Form 1120) Book Title: South-Western Federal Taxation: Comprehensive Volume Printed By: Paul Cox (pcox@mec.cuny.edu) 2015 Cengage Learning, Cengage Learning Problem 3C Corporation (Form 1120) On November 1, 2005, Janet Morton and Kim Wong formed Pet Kingdom, Inc., to sell pets and pet supplies. Pertinent information regarding Pet Kingdom is summarized as follows: Pet Kingdom's business address is 1010 Northwest Parkway, Dallas, TX 75225; its telephone number is (214) 555-2211; and its e-mail address is petkingdom@pki.com. The employer identification number is 11-1111111, and the principal business activity code is 453910. Janet and Kim each own 50% of the common stock; Janet is president and Kim is vice president of the company. No other class of stock is authorized. Both Janet and Kim are full-time employees of Pet Kingdom. Janet's Social Security number is 123-45-6789, and Kim's Social Security number is 987-65-4321. Pet Kingdom is an accrual method, calendar year taxpayer. Inventories are determined using FIFO and the lower of cost or market method. Pet Kingdom uses the straight-line method of depreciation for book purposes and accelerated depreciation (MACRS) for tax purposes. During 2013, the corporation distributed cash dividends of $250,000. Pet Kingdom's financial statements for 2013 are shown below. http:/g.cengage.com/staticbreader/ui/appsbreader/print_preview/print_preview.html 13/26 11/1/2015 Print Preview http:/g.cengage.com/staticbreader/ui/appsbreader/print_preview/print_preview.html 14/26 11/1/2015 Print Preview During 2013, Pet Kingdom made estimated tax payments of $90,000 each quarter to the IRS. Prepare a Form 1120 for Pet Kingdom for tax year 2013. Suggested software: H&R BLOCK Tax Software. Chapter E: Practice Set AssignmentsComprehensive Tax Return Problems Problem 4C Corporation (Form 1120) Book Title: South-Western Federal Taxation: Comprehensive Volume Printed By: Paul Cox (pcox@mec.cuny.edu) 2015 Cengage Learning, Cengage Learning Problem 4C Corporation (Form 1120) On February 12, 2002, Nancy Trout and Delores Lake formed Kingfisher Corporation to sell fishing tackle. Pertinent information regarding Kingfisher is summarized as follows: Kingfisher's business address is 1717 Main Street, Ely, MN 55731; its telephone number is (218) 555-2211; and its email address is kingfisher@kf.com. The employer identification number is 11-1111111, and the principal business http:/g.cengage.com/staticbreader/ui/appsbreader/print_preview/print_preview.html 15/26 11/1/2015 Print Preview activity code is 451110. Nancy owns 50% of the common stock and is president of the company, and Delores owns 50% of the common stock and is vice president of the company. No other class of stock is authorized. Both Nancy and Delores are full-time employees of Kingfisher. Nancy's Social Security number is 123-45-6789, and Delores's Social Security number is 987-65-4321. Kingfisher is an accrual method, calendar year taxpayer. Inventories are determined using FIFO and the lower of cost or market method. Kingfisher uses the straight-line method of deprecation for book purposes and accelerated depreciation (MACRS) for tax purposes. During 2013, the corporation distributed cash dividends of $80,000. Kingfisher's financial statements for 2013 are shown below. http:/g.cengage.com/staticbreader/ui/appsbreader/print_preview/print_preview.html 16/26 11/1/2015 Print Preview http:/g.cengage.com/staticbreader/ui/appsbreader/print_preview/print_preview.html 17/26 11/1/2015 Print Preview During 2013, Kingfisher made estimated tax payments of $43,750 each quarter to the IRS. Prepare a Form 1120 for Kingfisher for tax year 2013. Suggested software: H&R BLOCK Tax Software. Chapter E: Practice Set AssignmentsComprehensive Tax Return Problems Problem 5Partnership (Form 1065) Book Title: South-Western Federal Taxation: Comprehensive Volume Printed By: Paul Cox (pcox@mec.cuny.edu) 2015 Cengage Learning, Cengage Learning Problem 5Partnership (Form 1065) Ryan Ross (111-11-1111), Oscar Oleander (222-22-2222), Clark Carey (333-33-3333), and Kim Kardigan (444-44-4444) are equal members in ROCK the Ages, LLC. ROCK serves as agents and managers for prominent musicians in the Los Angeles area. The LLC's Federal ID number is 55-5555555. It uses the cash basis and the calendar year and began operations on January 1, 2002. Its current address is 6102 Wilshire Boulevard, Suite 2100, Los Angeles, CA 90036. ROCK was the force behind such music icons as Rhiannon and Burgundy 5 and has had a very profitable year. The following information was taken from http:/g.cengage.com/staticbreader/ui/appsbreader/print_preview/print_preview.html 18/26 11/1/2015 Print Preview the LLC's income statement for the current year: During the past couple of years, ROCK has taken advantage of bonus depreciation and 179 deductions and fully remodeled the premises and upgraded its leasehold improvements. This year, ROCK wrapped up its remodel with the purchase of $20,000 of office furniture for which it will claim a 179 deduction. (For simplicity, assume that ROCK uses the same cost recovery methods for both tax and financial purposes.) There is no depreciation adjustment for alternative minimum tax purposes. ROCK invests much of its excess cash in non-dividend-paying growth stocks and tax-exempt securities. During the year, the LLC sold two securities. On June 15, 2013, ROCK purchased 1,000 shares of Tech, Inc. stock for $100,000; it sold those shares on December 15, 2013, for $80,000. On March 15, 2012, ROCK purchased 2,000 shares of BioLabs, Inc. stock for $136,000; it sold those shares for $160,000 on December 15, 2013. These transactions were reported to the IRS on Forms 1099-B; ROCK's basis in these shares was reported. Net income per books is $840,000. The firm's activities do not constitute \"qualified production activities\" for purposes of the 199 deduction. On January 1, 2013, the members' capital accounts equaled $200,000 each. No additional capital contributions were made in 2013. In addition to their guaranteed payments, each member withdrew $250,000 cash during the year. The LLC's balance sheet as of December 31, 2013, is as follows: http:/g.cengage.com/staticbreader/ui/appsbreader/print_preview/print_preview.html 19/26 11/1/2015 Print Preview Assume that all debt is shared equally by the members. Each member has personally guaranteed the debt of the LLC. The business code for \"Agents and Managers for Artists, Athletes, Entertainers, and Other Public Figures\" is 711410. The LLC's Form 1065 was prepared by Ryan Ross and sent to the Ogden, UT IRS Service Center. All members are active in LLC operations. a. Prepare Form 1065, pages 1, 4, and 5, for ROCK the Ages, LLC. b. If you are using tax return preparation software, prepare Form 4562 and Schedule D. c. Prepare Schedule K-1 for Ryan Ross, 15520 W. Earlson Street, Pacific Palisades, CA 90272. Chapter E: Practice Set AssignmentsComprehensive Tax Return Problems Problem 6S Corporation (Form 1120S) Book Title: South-Western Federal Taxation: Comprehensive Volume Printed By: Paul Cox (pcox@mec.cuny.edu) 2015 Cengage Learning, Cengage Learning Problem 6S Corporation (Form 1120S) Max Martin (111-11-1111), David Dorn (123-45-6789), and Sandra Smith (987-65-4321) are, respectively, 55%, 35%, and 10% owners of Cotton, Inc. (12-3456789), a textile manufacturing company located at 1824 Church Street, Concord, NC 28025. The company's first S election was made on January 1, 1999. The following information was taken from the financial income statement for 2013. http:/g.cengage.com/staticbreader/ui/appsbreader/print_preview/print_preview.html 20/26 11/1/2015 Print Preview A comparative balance sheet appears below. http:/g.cengage.com/staticbreader/ui/appsbreader/print_preview/print_preview.html 21/26 11/1/2015 Print Preview You must determine whether a Schedule M-3 is to be prepared. Cotton's accounting firm and the corporate books and records provide the following additional information. Salaries and wages include $1.2 million of deferred compensation. Of the bad debt expense, $230,000 is not deductible this year. Of other expenses, $3,700 is permanently not deductible. Using the preceding information, prepare a complete Form 1120S and a Schedule K-1 for Max Martin, 1824 Church Street, Concord, NC 28025. If any information is missing, make realistic assumptions. Chapter E: Practice Set AssignmentsComprehensive Tax Return Problems Problem 7Gift Tax (Form 709) Book Title: South-Western Federal Taxation: Comprehensive Volume Printed By: Paul Cox (pcox@mec.cuny.edu) 2015 Cengage Learning, Cengage Learning http:/g.cengage.com/staticbreader/ui/appsbreader/print_preview/print_preview.html 22/26 11/1/2015 Print Preview Problem 7Gift Tax (Form 709) James A. and Ella R. Polk, ages 70 and 65, are retired physicians who live at 13319 Taylorcrest Street, Houston, Texas 77079. Their three adult children (Benjamin Polk, Michael Polk, and Olivia Turner) are mature and responsible persons. The Polks have heard that the Obama administration has proposed lowering the Federal gift tax exclusion from $5.25 million to $3 million. Although this change may not occur, the Polks feel they should take advantage of the more generous exclusion available under existing law. Thus, in 2013, the Polks make transfers of many of their high value investments. These and other gifts made during 2013 are summarized below. Prepare 2013 gift tax returns (Form 709) for both of the Polks. A 2513 election to split gifts is made. The Polks have made no taxable gifts in prior years. Relevant Social Security numbers are 123-45-6789 (James) and 123-45-6788 (Ella). Chapter E: Practice Set AssignmentsComprehensive Tax Return Problems Problem 8Estate Tax (Form 706) Book Title: South-Western Federal Taxation: Comprehensive Volume Printed By: Paul Cox (pcox@mec.cuny.edu) 2015 Cengage Learning, Cengage Learning Problem 8Estate Tax (Form 706) Harriet C. Harper, age 74, died as a result of an automobile accident on June 6, 2013. At the time of her death, Harriet lived at 1520 Marlin Drive, Clearwater, FL 33758. She was predeceased by her husband, John W. Harper, who died in 2001. Harriet is survived by her http:/g.cengage.com/staticbreader/ui/appsbreader/print_preview/print_preview.html 23/26 11/1/2015 Print Preview two adult children, Travis Harper and Hannah Baker. Information regarding Harriet's estate is summarized below. John's will established a marital deduction trust with $1 million of assets. Under the terms of the trust, Harriet received a life estate with the remainder passing to their children (i.e., Travis and Hannah). To obtain a marital deduction for John's estate, his executor made a QTIP election. On June 6, 2013, the trust had a value of $2 million. During 2013, the trust assets are distributed to Travis and Hannah. Harriet owned three insurance policies with Falcon Assurance Companyone on her life and one on the life of each of her children. All policies have a maturity value of $100,000; all name Harriet or her estate as the beneficiary. As of June 6, 2013, the policies on Travis and Hannah each had a value of $40,000. A tract of undeveloped land in Pinellas County (FL) was purchased by Harriet as an investment in 2002 for $300,000. To help finance the purchase, Harriet obtained mortgage funds from Tampa Savings and Loan. As of June 6, 2013, the land was worth $900,000, and Harriet owed $100,000 on the mortgage. Rental beach cottages in Destin (FL) were inherited from John and worth $1 million on June 6, 2013. The cottages had a value of $600,000 when John died; his original cost is unknown. A family vacation lodge in Union (SC) was held as joint tenants with right of survivorship in the names of Harriet Harper, Travis Harper, and Hannah Baker. The property was purchased in 2002 for $400,000; $200,000 was provided by Harriet and $100,000 was furnished by each of her children. On June 6, 2013, the lodge was worth $1 million. Harriet's Marlin Drive residence is owned by her. It had a value of $500,000 on June 6, 2013. The accident that fatally injured Harriet was caused by the delivery truck of a national soft drink bottling company. Not only was the truck in disrepair, but the driver was charged with DUI. To avoid the adverse publicity of a lawsuit involving the obvious gross negligence, the corporate office offered to settle any claims. After careful deliberation, Harriet's co-executors (Travis and Hannah) signed a release. In return, the estate received $400,000 in cash plus payment of all medical expenses. Of the medical expenses, the doctors and hospital were paid directly by the bottling company. The settlement was received by the estate before it was closed and the Form 706 filed. Other assets owned by Harriet as of June 6, 2013 included: http:/g.cengage.com/staticbreader/ui/appsbreader/print_preview/print_preview.html 24/26 11/1/2015 Print Preview Liabilities and expenses in connection with the administration of the estate include: Because Travis and Hannah had experience in handling their father's estate, Harriet's will designated them as co-executors of her estate. The probate of the Estate of Harriet C. Harper is completed December 16, 2013. Travis and Hannah are the sole heirs. Prepare an estate tax return (Form 706) for Harriet. In this regard, make the following assumptions. Disregard any request for information that is not available. Some deductions require a choice between the income and estate taxes (Form 706 or Form 1041) and cannot be deducted twice (see Chapters 27 and 28). Resolve all choices in favor of Form 706. Harriet had made no taxable gifts in prior years. Relevant Social Security numbers: Chapter E: Practice Set AssignmentsComprehensive Tax Return Problems Problem 9Trust (Form 1041) Book Title: South-Western Federal Taxation: Comprehensive Volume Printed By: Paul Cox (pcox@mec.cuny.edu) http:/g.cengage.com/staticbreader/ui/appsbreader/print_preview/print_preview.html 25/26 11/1/2015 Print Preview 2015 Cengage Learning, Cengage Learning Problem 9Trust (Form 1041) Prepare the 2013 fiduciary income tax return (Form 1041) for the Green Trust. In addition, determine the amount and character of the income and expense items that each beneficiary must report for the year, and prepare a Schedule K-1 for Marcus White. Omit all alternative minimum tax computations. The year's activities of the trust include the following. Under the terms of the trust instrument, cost recovery, net capital gains and losses, and fiduciary fees are allocable to corpus. The trustee is required to distribute $25,000 to Marcus every year. For the year, the trustee distributed $40,000 to Marcus and $40,000 to Marcus's sister, Ellen Hayes. No other distributions were made. In computing DNI, the trustee properly assigned all of the deductible fiduciary's fees to the taxable interest income. The trustee paid $4,000 in estimated taxes for the year on behalf of the trust. Any 2013 refund is to be credited to 2014 estimates. The exempt income was not derived from private activity bonds. The trust was created on December 14, 1953. It is not subject to any recapture taxes, nor does it have any tax credits. None of its income was derived under a personal services contract. The trust has no economic interest in any foreign trust. Its Federal identification number is 11-1111111. The trustee, Wisconsin State National Bank, is located at 3100 East Wisconsin Avenue, Milwaukee, WI 53201. Its employer identification number is 11-1111111. Marcus lives at 9880 East North Avenue, Shorewood, WI 53211. His Social Security number is 123-45-6789. Ellen lives at 6772 East Oklahoma Avenue, Milwaukee, WI 53204. Her Social Security number is 987-65-4321. Chapter E: Practice Set AssignmentsComprehensive Tax Return Problems Problem 9Trust (Form 1041) Book Title: South-Western Federal Taxation: Comprehensive Volume Printed By: Paul Cox (pcox@mec.cuny.edu) 2015 Cengage Learning, Cengage Learning 2015 Cengage Learning Inc. All rights reserved. No part of this work may by reproduced or used in any form or by any means graphic, electronic, or mechanical, or in any other manner - without the written permission of the copyright holder. http:/g.cengage.com/staticbreader/ui/appsbreader/print_preview/print_preview.html 26/26