TAX 415

TAX RETURN PROJECT

Fall 2021

Tax Return Instructions

1. Prepare a Form 1120 Corporate Tax Return for 2020. The following forms must be completed:

* Form 1120: U.S. Corporation Income Tax Return (pages 1 6)

* Schedule D (for Form 1120): Capital Gains and Losses

* Form 1125-A: Cost of Goods Sold

* Form 1125-E: Compensation of Officers

* Form 8949: Sale and Disposition of Capital Assets

* Form 4562: Depreciation

* Form 4797: Sales of Business Property

In addition, you must attach supporting schedules for line items in the tax return whenever required, e.g., Line 26 of Form 1120. DO NOT complete Form 2220: Underpayment of Estimated Tax by Corporations.

2. When completing the return, round amounts to the nearest dollar (and leave the cents columns blank). Do not place zeros on lines for which there is no amount (unless the instructions tell you to do so); merely leave the line blank. You must prepare the return by hand. You must use a pencil when preparing your return; no ink, no typing, no computer-generated print.

Thanks

Book Income Statement 2020 Sales Returns Net Sales 10,000,000 (250,000) 9,750,000 Beginning inventory Purchases Ending inventory Cost of goods sold Gross profit 2,500,000 5,500,000 (3,500,000) (4,500,000) 5,250,000 152,500 20,500 55,000 30,000 Expenses: Depreciation Repairs General insurance Net premium - officer life insurance Officers' compensation Other salaries Utilities Advertising Legal and accounting fees Charitable contributions Payroll tax Interest expense Bad debt expense 650,000 400,000 72,000 48,000 50,000 30,000 62,000 210,000 45,000 Total expenses (1,825,000) Gain on sale of equipment Interest on municipal bonds Net gain on stock sales Dividend income 105,000 5,000 45,000 12,000 Net income before FIT expense Federal income tax (FIT) expense State income tax expense 3,592,000 (742,560) (75,000) Net income per books 2774 440 Book Balance Sheet Information January 1, 2020 Debit Decemer 31, 2020 Debit Account Credit Credit 516,774 400,000 815,494 500,000 20,000 25,000 2,500,000 260,000 30,000 60,000 200,000 2,000,000 3,500,000 50,000 30,000 80,000 200,000 2,000,000 100,000 140,000 750,000 1,100,000 Cash Accounts receivable Allowance for doubtful accounts Inventory Investment in corporate stock Investment in municipal bonds Cash surrender value of life insurance Land Buildings Accum. Depreciation - buildings Equipment Accum. Depreciation - equipment Trucks Accum. Depreciation - trucks Accounts payable Notes payable (short-term) Accrued payroll taxes Accrued state income taxes Accrued federal income taxes Bonds payable (long-term) Deferred tax liability Capital stock - common Retained earnings - unappropriated 187,500 205,000 100,000 100,000 30,000 300,000 800,000 14,880 4,500 2,500 1,800,000 57,394 1,500,000 2,000,000 50,000 270,000 640,000 18,600 7,500 77,361 600,000 167,593 1,500,000 4,674,440 Totals 6.816.774 6.816.774 8.375_494 8,375 494 Book Income Statement 2020 Sales Returns Net Sales 10,000,000 (250,000) 9,750,000 Beginning inventory Purchases Ending inventory Cost of goods sold Gross profit 2,500,000 5,500,000 (3,500,000) (4,500,000) 5,250,000 152,500 20,500 55,000 30,000 Expenses: Depreciation Repairs General insurance Net premium - officer life insurance Officers' compensation Other salaries Utilities Advertising Legal and accounting fees Charitable contributions Payroll tax Interest expense Bad debt expense 650,000 400,000 72,000 48,000 50,000 30,000 62,000 210,000 45,000 Total expenses (1,825,000) Gain on sale of equipment Interest on municipal bonds Net gain on stock sales Dividend income 105,000 5,000 45,000 12,000 Net income before FIT expense Federal income tax (FIT) expense State income tax expense 3,592,000 (742,560) (75,000) Net income per books 2774 440 Book Balance Sheet Information January 1, 2020 Debit Decemer 31, 2020 Debit Account Credit Credit 516,774 400,000 815,494 500,000 20,000 25,000 2,500,000 260,000 30,000 60,000 200,000 2,000,000 3,500,000 50,000 30,000 80,000 200,000 2,000,000 100,000 140,000 750,000 1,100,000 Cash Accounts receivable Allowance for doubtful accounts Inventory Investment in corporate stock Investment in municipal bonds Cash surrender value of life insurance Land Buildings Accum. Depreciation - buildings Equipment Accum. Depreciation - equipment Trucks Accum. Depreciation - trucks Accounts payable Notes payable (short-term) Accrued payroll taxes Accrued state income taxes Accrued federal income taxes Bonds payable (long-term) Deferred tax liability Capital stock - common Retained earnings - unappropriated 187,500 205,000 100,000 100,000 30,000 300,000 800,000 14,880 4,500 2,500 1,800,000 57,394 1,500,000 2,000,000 50,000 270,000 640,000 18,600 7,500 77,361 600,000 167,593 1,500,000 4,674,440 Totals 6.816.774 6.816.774 8.375_494 8,375 494