S Corporation Tax Return ProblemRequired:$*$ Using the information provided below, complete First Place Inc.$\text{'}$s $($FPI$)2022$ Form $1120$S$.$ Also complete Kate Kleiber's Schedule K$-1$ and the forms $1125-$A and $1125-$E$.*$ Form $4562$ for depreciation is not required. Include the amount of tax depreciation given in the problem on the appropriate line on the first page of Form $1120$S$.*$ If any information is missing, use reasonable assumptions to fill in the gaps.$*$ The forms, schedules, and instructions can be found at the IRS website $($www$.$irs.gov$).$The instructions can be helpful in completing the forms.Facts:First Place Inc. $($FPI$)$ was formed as a corporation on January $5,2018,$ by its two owners Kate Kleiber and James Chandler. FPI immediately elected to be taxed as an S corporation for federal income tax purposes. FPI sells mountain climbing gear to retailers throughout the Rocky Mountain region. Kate owns $70$ percent of the FPI common stock $($the only class of stock outstanding$)$ and James owns $30$ percent, and both devote $100\%$ of their working time to FPI.$*$ FPT is located at $4200$ West $400$ North, Salt Lake City, Utah $84116.*$ FPI's Employer Identification Number is $87-5467544.*$ FPI's business activity is wholesale sales. Its business activity code is $423910.*$ Both shareholders work as employees of the corporation.$*$ Kate is the president of FPI $($Social Security number $312-89-4567).$ Kate's address is$1842$ East $8400$ South, Sandy, Utah $84094.*$ James is the vice president of FPI $($Social Security number $321-98-7645).$ James's address is $2002$ East $8145$ South, Sandy, Utah $84094.*$ FPI uses the accrual method of accounting and has a calendar year$-$end.The following is FPI's $2022$ income statement:FPI Income StatementFor year ending December $31,2022$Revenue from sales$ $980,000$Sales returns and allowances$(10,000)$Cost of goods sold$(110\mathrm{.}000)$Gross profit from operations$ $860,000$Other income:Dividend income$ $15,000$Interest income$5,000$Gross income$ $880,000$Expenses:Compensation$$(600,000)$Depreciation$(10,000)$Bad debt expense$(14,000)$Travel$(1,000)$Maintenance$(8,000)$Business interest$(1,000)$Property taxes$(7,000)$Charitable contributions$(10,000)$Other taxes$(30,000)$Rent$(28,000)$Advertising$(14,000)$Professional services$(11,000)$Employee benefits$(12,000)$Supplies$(3,000)$Other expenses$(21,000)$Total expenses$(771\mathrm{.}000)$Net income$ $110,000$Notes:$1.$ FPI's purchases during $2022$ were $$115,000.$ It values its inventory based on cost using the FIFO inventory cost flow method. Assume the rules of $263$A do not apply to FPI, and that the company did not make any changes in the way it measures or tracks inventory during $2022\mathrm{.}2.$ Of the $$5,000$ interest income, $$2,000$ was from a West Jordan city bond used to fund public activities $($issued in $2018)$ and $$3,000$ was from a money market account$\mathrm{.}3.$ FPI's dividend income comes from publicly traded stocks that FPI has owned for two years$\mathrm{.}4.$ FPT$\text{'}$s compensation is as follows:$*$ Kate, $$120,000*$ James, $$80,000*$ Other, $$400,000\mathrm{.}1.$ FPI wrote off $$6,000$ in accounts receivable as uncollectible during the year$\mathrm{.}2.$ FPI's total MACRS depreciation for $2022$ is $$17,000\mathrm{.}3.$ FPI made a $$10,000$ cash donation to the American Red Cross in $2022\mathrm{.}4.$ FPI's beginning balance of its Accumulated Adjustments Account $($AAA$)$ was $$320,000\mathrm{.}5.$ FPI distributed $$60,000$ to its shareholders.FPI's balance sheet for the period ending $12/31/2022,$ and the prior year, is below.FPl Balance Sheet as of $12/31/202212/31/202112/31/2022$AssetsCash$ $90,000$$$144,000$Accounts receivable$300,000310,000$Allowance for doubtful accounts$(60,000)(68,000)$Inventory$45,00050,000$State and local bonds$38,00038,000$Investments in stock$82,00082,000$Fixed assets$100,000100,000$Accumulated depreciation$(20,000)(30,000)|$Other assets$20,00021,000$Total assets$ $595,000$$ $647\mathrm{.}000$Liabilities and Shareholders' EquityAccounts payable$ $60,000$$ $55,000$Other current liabilities$5,0008,000$Other liabilities$10,00014,000$Capital stock$200,000200,000$Retained earnings$320,000370,000$Total liabilities and shareholders' equity$$595\mathrm{.}000$$$647,000$

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