Tax Return Problems formerly Appendix C Corporate Tax Return Problem 2 Required Complete Blue Catering Service Inc 's (BCS) 2019 Form 1120, Schedule D, and Schedule G (if applicable) using the information provided below 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 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 Cara Siler, Janna Funk, and Valerie Cloward each own one third of the common stock of Blue Catering Services Inc (BCS) BCS was incorporated on February 4, 2011 It has only one class of stock outstanding and operates as a C corporation for tax purposes BCS caters all types of social events throughout southern California BCS is located at 540 Waverly Way, San Diego, California 92101 BCS's Employer Identification Number is 38 4743474 BCS's business activity is catering food and services Its business activity code is 722300 The shareholders also work as officers for the corporation as follows Cara is the chief executive officer and president (Social Security number 231 54 8976) Janna is the executive vice president and chief operating officer (Social Security number 798 56 3241) Valerie is the vice president of finance (Social Security number 879 21 4536) All officers devote 100 percent of their time to the business and all officers are U S citizens BCS uses the accrual method of accounting and has a calendar year end BCS made four equal estimated tax payments of $8,750 each Its tax liability last year was $41,000 If it has overpaid its federal tax liability, BCS would like to receive a refund BCS paid a dividend of $30,000 to its shareholders on November 1 BCS had ample earnings and profits (E P) to absorb the distribution The following is BCS's audited income statement for 2019 BCS Income Statement For year ending December 31, 2019 Revenue from sales $ 1,800,000 Sales returns and allowances (5,000) Cost of goods sold (350,000) Gross profit from operations $ 1,445,000 Other income Capital loss $ (15,000) Dividend income 25,000 Interest income 10 000 Gross income $ 1,465,000 Expenses Compensation $ (950,000) Depreciation (10,000) Bad debt expense (15,000) Meals (3,000) Maintenance (6,000) Property taxes (11,000) State income taxes (45,000) Other taxes (44,000) Rent (60,000) Interest (5,000) Advertising (52,000) Professional services (16,000) Employee benefits (32,000) Supplies (5,000) Other expenses (27,000) Total expenses (1,281,000) Income before taxes 184,000 Federal income tax expense (62,000) Net income after taxes S 122,000

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Tax Return Problems - formerly Appendix C Corporate Tax Return Problem 2 Required: Complete Blue Catering Service Inc.'s (BCS) 2019 Form 1120, Schedule D, and

Tax Return Problems - formerly Appendix C

Corporate Tax Return Problem 2

Required:

Complete Blue Catering Service Inc.'s (BCS) 2019 Form 1120, Schedule D, and Schedule G (if applicable) using the information provided below.
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.
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:

Cara Siler, Janna Funk, and Valerie Cloward each own one-third of the common stock of Blue Catering Services Inc. (BCS). BCS was incorporated on February 4, 2011. It has only one class of stock outstanding and operates as a C corporation for tax purposes. BCS caters all types of social events throughout southern California.

BCS is located at 540 Waverly Way, San Diego, California 92101.
BCS's Employer Identification Number is 38-4743474.
BCS's business activity is catering food and services. Its business activity code is 722300.
The shareholders also work as officers for the corporation as follows:
Cara is the chief executive officer and president (Social Security number 231-54-8976).
Janna is the executive vice president and chief operating officer (Social Security number 798-56-3241).
Valerie is the vice president of finance (Social Security number 879-21-4536).
All officers devote 100 percent of their time to the business and all officers are U.S. citizens.
BCS uses the accrual method of accounting and has a calendar year-end.
BCS made four equal estimated tax payments of $8,750 each. Its tax liability last year was $41,000. If it has overpaid its federal tax liability, BCS would like to receive a refund.
BCS paid a dividend of $30,000 to its shareholders on November 1. BCS had ample earnings and profits (E&P) to absorb the distribution.

The following is BCS's audited income statement for 2019:

BCS Income Statement For year ending December 31, 2019 Revenue from sales $ 1,800,000 Sales returns and allowances (5,000) Cost of goods sold (350,000) Gross profit from operations $ 1,445,000 Other income: Capital loss $ _(15,000) Dividend income 25,000 Interest income 10.000 Gross income $ 1,465,000 Expenses: Compensation $_(950,000) Depreciation (10,000) Bad debt expense (15,000) Meals (3,000) Maintenance (6,000) Property taxes (11,000) State income taxes (45,000) Other taxes (44,000) Rent (60,000) Interest (5,000) Advertising (52,000) Professional services (16,000) Employee benefits (32,000) Supplies (5,000) Other expenses (27,000) Total expenses (1,281,000) Income before taxes 184,000 Federal income tax expense (62,000) Net income after taxes S 122,000