Prepare the 2017 corporate tax return for Simeon Consulting, Inc. along with any necessary supporting schedules.

This is depreciation information and a notice to not calculate an underpayment penalty for the tax return.

Current year depreciation on property placed in service before 2017:

Building ($1,000,000 x 0.02564) $ 25,640

Equipment 1 ($200,000 x 0.1249 x 0.5) 12,490

Equipment 2 ($400,000 x 0.1249) 49,960

Trucks ($100,000 x 0.192) 19,200

Total $107,290

Current year depreciation on equipment placed in service in 2017:

Sec. 179 expensing $500,000

MACRS, mid-quarter [($800,000 - $500,000) x 0.0357] 10,710 Total $510,710

Total current-year depreciation: $618,000

Underpayment penalty:

Omit Form 2220 and do not calculate a penalty.

See next page for tax return information.

Tax form/Return Preparation Problems

Simeon Consulting, Inc. is located at 5500 Fourth Avenue, City, ST 98765.

The corporation uses the calendar year and accrual basis for both book and tax purposes.

It is engaged in the sale of musical instruments with an employer identification number (EIN) of XX-2017015. The company incorporated on December 31, 2011, and began business on January 2, 2012.

Estimated Tax Payments (Form 2220): The corporation deposited estimated tax payments as follows:

04/15/2017	90,000
06/15/2017	180,000
09/15/2017	220,000
12/15/2017	230,000

Excel Schedule: Simeon Consulting, Inc.Book Balance Sheet Information

Taxable income in 2016 was $1.2 million, and the 2016 tax was $408,000. The corporation earned its 2017 taxable income evenly throughout the year. Therefore, it does not use the annualization or seasonal methods.

Inventory and Cost of Goods Sold (Form 1125-A):

The corporation uses the periodic inventory method and prices its inventory using the lower of FIFO cost or market. Only beginning inventory, ending inventory, and purchases should be reflected on Form 1125-A. No other costs or expenses are allocated to cost of goods sold. Note: the corporation is exempt from the uniform capitalization (UNICAP) rules because average gross income for the previous three years was less than $10 million.

Line 9 (a) Check (ii) ????

(b), (c) & (d) Not applicable ????

(e) & (f) No

Compensation of Officers (Form 1125-E):

a.	b.	c.	d.	f.
Klayren Infante	XXX-XX-XXXX	100%	50%	$230,000
Carlos Guerra	XXX-XX-XXXX	100%	25%	145,000
Corina DeJesus	XXX-XX-XXXX	100%	25%	145,000

Bad Debts: For tax purposes, the corporation uses the direct writeoff method of deducting bad debts. For book purposes, the corporation uses an allowance for doubtful accounts. During 2017, the corporation charged $32,000 to the allowance account, such amount representing actual writeoffs for 2017.

Excel Schedule: Simeon Consulting, Inc.Book Income Statement 2017

Additional Information (Schedule K):

1 b Accrual

2 a 451140 ?b Retail sales ?c Musical instruments

3 No

4 a No ?b Yes; omit Schedule G

5 a No ?b No

6-7 No

8 Do not check box

9 Fill in the correct amount

10 3

11 Do not check box

12 Not applicable

13-14 No

15a No b Not applicable

16-18 No

Organizational Expenditures: The corporation incurred $3,000 of organizational expenditures on January 2, 2012. For book purposes, the corporation expensed the entire expenditure. For tax purposes, the corporation elected under Sec. 248 to deduct the entire $3,000 in 2012. Therefore, no amortization expenditures appear in the tax return or book financial statements for the current year.

Capital Gains and Losses:

The corporation sold 100 shares of PDQ Corp. common stock on October 7, 2017, for $75,000. The corporation acquired the stock on December 15, 2016, for $50,000.

The corporation also sold 75 shares of JSB Corp. common stock on June 17, 2017, for $60,000. The corporation acquired this stock on September 18, 2013, for $68,000.

The corporation has a $10,000 capital loss carryover from 2016.

These transactions were not reported to the corporation on Form 1099-B.

Fixed Assets and Depreciation:

For book purposes: The corporation uses straight-line depreciation over the useful lives of assets as follows:

store building, 50 years; equipment, ten years; and trucks, five years.

The corporation takes a half-years depreciation in the year of acquisition and the year of disposition and assumes no salvage value.

The book financial statements reflect these calculations.

For tax purposes: All assets are MACRS property as follows: store building, 39-year nonresidential real property; equipment, seven-year property; and trucks, five-year property.

The corporation acquired the store building for $1 million and placed it in service on January 2, 2012.

The corporation acquired two pieces of equipment for $200,000 (Equipment 1) and $400,000 (Equipment 2) and placed them in service on January 2, 2012.

The corporation acquired the trucks for $100,000 and placed them in service on July 18, 2015.

The trucks are not listed property and are not subject to the limitation on luxury automobiles.

The corporation did not make the expensing election under Sec. 179 or take bonus depreciation on any property acquired before 2017.

Accumulated tax depreciation through December 31, 2016, on these properties is as follows: Store building $ 75,890 Equipment 1 112,540 Equipment 2 225,080 Trucks 52,000

On October 16, 2017, the corporation sold for $220,000 Equipment 1 that originally cost 200,000 on January 2, 2014.

The corporation had no Sec. 1231 losses from prior years.

In a separate transaction on October 17, 2017, the corporation acquired and placed in service a piece of equipment costing $800,000. Assume these two transactions do not qualify as a like-kind exchange. The new equipment is seven-year property.

The corporation made the Sec. 179 expensing election with regard to the new equipment but elected out of bonus depreciation.

Where applicable, use published IRS depreciation tables to compute 2017 depreciation (You can find the depreciation schedules in Appendix C in your book).

Other Information:

The corporations activities do not qualify for the U.S. production activities deduction.

Ignore the AMT and accumulated earnings tax.

The corporation received dividends from taxable, domestic corporations, the stock of which Simeon Consulting, Inc. owns 25%.

The corporation paid $80,000 in cash dividends to its shareholders during the year and charged the payment directly to retained earnings.

The state income tax in the book income statement is the exact amount of such taxes incurred during the year.

The corporation is not entitled any credits.

Ignore the financial statement impact of any underpayment penalties incurred on the tax return.

Required: Prepare the 2017 corporate tax return for Simeon Consulting, Inc. along with any necessary supporting schedules.

Simeon Consulting, Inc
Income Statement
For the year ended 12/31/2017
Sales		8,050,000
Returns		(270,000)
Net Sales		7,780,000
Beginning Inventory	2,000,000
Purchases	4,400,000
Ending Inventory	(2,800,000)
Cost of Goods Sold		3,600,000
Gross Profit		4,180,000
Expenses:
Depreciation	130,000
Repairs	16,640
General Insurance	24,000
Net Premium - Officers' Life Insurance	24,000
Officers' Compensation	520,000
Other Salaries	320,000
Utilities	57,600
Advertising	28,400
Legal and Accounting Fees	40,000
Charitable Contributions	24,000
Payroll taxes	50,000
Interest Expense	168,000
Bad Debt Expense	36,000
Total Expenses		(1,438,640)
Gain on sale of Equipment		80,000
Interest on Municipal Bonds		4,000
Net Gain on Stock Sales		17,000
Dividend Income		9,600
Net Income Before Income taxes		2,851,960
Federal Income Tax Expense		(950,382)
State Income Tax Expense		(60,000)
Net Income Before Income taxes		1,841,578

Simeon Consulting
Post - Closing Trial Balance
	Jan 1, 2017	Dec 31, 2017
Cash	214,000	520,000
Accounts Receivable	320,000	400,000
Allowance for Doubtful Accounts	(16,000)	(20,000)
Inventory	2,000,000	2,800,000
Investment in Corporate Stock	168,000	50,000
Investment in Municipal Bonds	32,000	32,000
Cash Surrender Value of Insurance	50,000	65,000
Land	250,000	250,000
Buildings	1,000,000	1,000,000
Accumulated Depreciation - Bldgs	(50,000)	(70,000)
Equipment	600,000	1,200,000
Accumulated Depreciation - Equip	(150,000)	(180,000)
Trucks	100,000	100,000
Accumulated Depreciation - Trucks	(30,000)	(50,000)
Accounts Payable	(299,167)	(312,807)
ST Notes Payable	(500,000)	(400,000)
Accrued Payroll Taxes	(12,000)	(15,000)
Accrued State Income Taxes	(3,600)	(6,000)
Accrued Federral Income Taxes	(2,000)	(94,532)
Long Term Bonds Payable	(1,200,000)	(900,000)
Net Deferred Tax Liability	(71,233)	(217,083)
Common Stock	(800,000)	(800,000)
Retained Earnings	(1,600,000)	(3,351,578)