Prepare page 1 of form 1120, Complete Book of Tax Reconciliation, and Explation of Adjustments

C-Corporation Tax Return Instructions Purpose: The purpose of this tax return assignment is to apply the tax rules you have learned in Modules 2 through 4 related to C-Corporations in order to (1) prepare a book to tax reconciliation and (2) complete a portion of a corporate tax return (page 1 of Form 1120). Preparation Instructions: 1. Read the "C-Corporation Notes to Financial Statements and review the "C- Corporation Reconciliation Template" files provided. 2. With the information provided, complete the C-Corporation Reconciliation using the "C-Corporation Reconciliation Template" provided. 3. Download the 2020 Form 1120 from the IRS website. Click "Forms & Instructions", then search "1120" in the search bar. 4. Complete only page 1 of Form 1120. Do not complete the other forms and schedules referenced on Form 1120. For example, Form 1120 line 4 "Dividends" references Schedule C, line 23. Do not complete this referenced form. 5. Your documentation on the "C-Corporation Reconciliation Template" should provide sufficient explanation of all of the numbers you enter on Form 1120. Be sure to double check your math and cross references between your reconciliation and your tax form prior to submitting your work. 6. Prepare your files in accordance with the "Proficient" column of the Tax Return Rubric below. C-Corporation Notes to Financial Statements Fielding Sporting Goods Corporation (FSGC) is a calendar-year corporation. Please see the "C-Corporation Reconciliation Template" excel file for FSGC's current-year audited financial income statement. Notes with important tax information to accompany those financials are provided below. Notes: 1. FSGC owns 40 percent of the outstanding Magnolia Corp- (MC) stock. Magnolia Corp. reported $1,000,000 of income for the year. FSGC accounted for its investment in MC under the equity method and it recorded its pro rata share of MC's eamings for the year. MC also distributed a $150,000 dividend to FSGC. 2. Of the $20,000 interest income, $7,000 was from a City of Atlanta municipal bond, $5,500 was from a Dekalb County municipal bond, $3,500 was from a fully taxable corporate bond, and the remaining $4,000 was from a money market account 3. This amount includes officer compensation of 2,500,000 (one officer received $1,500,000 compensation, the remaining $1,000,000 was allocated equally between 4 other officers). 4. This amount is the portion of non-qualified stock option compensation that was expensed during the year (recipients are officers). There were no exercises during the year. 5. FSGC actually wrote off $90,000 of its accounts receivable as uncollectable. 6. Regular tax depreciation calculated under MACRS was $1,600,000 7. In the current year, FSGC paid $20,000 of actual payments on warranties it provided to customers. 8. FSGC made $425,000 of cash contributions to qualified charities during the year 9. On July 1 of this year, FSGC acquired the assets of another business. In the process it acquired $300,000 of goodwill. At the end of the year, FSGC wrote off $30,000 of the goodwill as impaired. 10. The other expenses do not contain any items with book-tax differences. 11. This is an estimated tax provision (federal tax expense) for the year. Assume that FSGC is not subject to state income taxes. Fielding Sporting Goods Corporation Book to Tax Reconciliation For the Year Ended December 31, 2020 Description Book Income Notes Book to Tax Adjustments Rel Taxable income Dr CT S 37,000,000 (24,500,000) 12,500,000 1 2 A B 400,000 20,000 50,000 12,970,000 3 4 Revenue from sales Cost of goods sold Gross profit Other income Income from investment in corporate stock Interest income Miscellaneous income Gross income Expenses Compensation Stock option compensation Advertising Rent Bad Debt expense Depreciation Warranty expenses Business meals Business entertainment Goodwill impairment Other expenses Federal income tax expense Total expenses before charitable contr. & DRD Income before charitable contribution Charitable contributions Dividends Received Deduction Book/Taxable income E 5 6 7 (6,800,000) (200,000) (1,450,000) (42,000) (58,000) (1,275,000) (85,000) 129,000) (48,000) (30,000) (140,000) (750,000) (10,907,000) 2,063,000 (425,000 G H 9 10 11 K & 1 1.638,000 Explanation of Adjustments B D E F F G H K L 1120 2020 DC Income U.S. Corporation Income Tax Return OMB No 1545-0123 For calendar year 2020 or tax year beginning 2020, ending Department of the Treaty tomar Go to www.irs.gov/Form 1120 for instructions and the latest Information A Check Man B Employer identification number 1a Comodedeu (Nive Tv 1) TYPE bilonies OR Nurser, street and room or we aPO Boxer de um Dute incorporated 2 Personlige PRINT Which PG Clyro state province ortry, and ZIP or for postal code Total 3 + ScreeME Check Instrum Fun Nech 10 Archange 1a Gross receipts or sale Rutums and allowances 11 c Balance Subtract line 1b from line 1 to 2 Cost of goods sold attach Form 1125-A) 3 Gross profit. Subtract line 2 from inte 3 4 Dividends and inclusions Schedule C, line 231 5 Interest 5 6 Grossrents 5 7 Gross royalties 7 8 Capital gain net income attach Schedule D Form 11200 8 9 Net gain or foss from Form 4797, Part Iine 17 (attach Form 4797) 10 Other incomes instructions-attach statement 10 11 Total income. Addiness through to 11 12 Compensation of officers free instructions-attach Form 1125- 12 13 Salaries and wages foss employment credits 13 14 Repairs and maintenance 14 15 Bad debts 15 16 Rents 16 17 Taxes and licenses 17 18 Interests instructions) 19 Charitable contributions 19 20 Depreciation from Form 4562 not claimed on Form 1125-A or elsewhere on retum (attach Form 4562) 20 21 Depletion 22 Advertising 23 Pension profit-sharing, otoplane 24 Employee benefit programs 25 Reserved for future use 26 Other deduction Mach statement 27 Total deductions. Addlines 12 tough 26 28 Taxable income before net operating loss deduction and special deductions. Subtractine 27 from line 11. 29a Net operating fous deduction see instructions 29a Special deductions Schedule C, line 24 200 Add lines 23 and 236 200 30 Taxable income. Subtract line 29c from line 28. See Instructions 30 31 Total tax Schedule J. Partline 11) 31 32 2020 net 965 taxability pwd Schedule J. Part II line 12 12 33 Total payments. Credits and section 965 net tax liability Schedule J. Partl, line 23) 33 34 Estimated tax penalty. See Instructions. Check at Form 2220 is attached 34 35 Amount owed. I line 33 is smaller than the total of lines 31, 32 and 34. enter amount owed 35 Overpayment. I line 33 in larger than the total of lines 31, 32, and 34. enter amount overpaid > 37 Enter wourt from Ine 36 you want Credited to 2021 estimated tax Refunded 37 Underpants who had been Sign May the IRS Here e pare shown to Signature of officer Date Tide Some Yes No PrintTypepper Preparer's Date Paid PTIN Che. Preparer Use Only Fm EIN Les For Paperwork Reduction Act Notice, see separate instructions. CN114500 Form 112000 Deductions (See Instructions for imitations on deductions.) pubBru | g| a g| pa Pumas 85 XXX