It is based on the multiple-choice question pasted below. Use the current 21 percent tax rate. (28) in the current year, Acom, Inc., had the following items of income and expense! Sales $500,000 Cost of sales 250,000 Dividends received 25,000 The dividends were received from a corporation of which Acom owns 30%. In Acom's current yoar income tax rotum, what amount should be reported as income before special deductions? A. $525.000 B. $508,750 C. $275,000 D. $250.000 The correct answer is c. A. The amount of $525.000 fails to deduct the cost of sales. B. The amount of $508,750 incorrectly takes the dividends received deduction, and it fails to deduct cost of sales C. Income before special deductions accounts for all items except for NOL canybacks, capital loss carrybacks, and dividends received deduction. Thus, income before special deductions is $275,000 ($500,000 - $25,000 - $250,000). D. The amount of $250,000 talls to include the dividends received as income Fm1120 UMNO, 1545012 Department of the Treasury U.S. Corporation Income Tax Return For Calendar year 2010 or tax year beginning 2019, ending Go to www.in.gow Form120 for instructions and the latest Inform 2019 ta Consideretur attach Form 51 TYPE Number, street and room or buiten WaP.O.box, se instructions OR PRINT City or town, ale or province, country, and ZIP or foreign postal code 4 Sch a Finalreum Name change Address ta b . ched Check retum Gross receipts or ses . . . . Retums and allowances. Balance Subtract line 1b from line la Cost of goods sold attach Form 1125-A). Gross profit. Subtractine 2 from line 1c. Dividends and inclusions (Schedule C, line 23) - . . - 2 3 4 - & 7 8 9 10 . . . . . - 9 8 12 13 14 15 16 ! - . . . . . . . 18 19 20 22 23 24 25 26 Crossrents . Gross royales . . Capital gain net income (attach Schedule D Form 11209 . . . . . . . . Net gain or loss from Form 4797. Part I line 17 (attach Form 4797) . . . . . . . . . . Other income see instructions-attach statement). . . Total income. Add lines through 10 . Compensation of officers se instructions-attach Form 1125-0 . . . . . . . . . Salaries and wages dess amployment credits - - - - - - - - - - - Repairs and maintenance . . . . . . . . . . . . . . . . Bad debts. . . . . . . . . . . . . . . . . Rents . . . . . . . . . . Taxes and licenses w and licenses . . . . . . . . . . . . . . . . . . . . . . . . . interest instructions - - - - - Charitable contributions . . . . . . . . . Depreciation from Form 4562 not claimed on Form 1125-A or elsewhere on return (attach Form 4582). Depletion - - - - - - - - Advertising . . . . Pension, profit-sharing, etc., plans - - Employee benefit programs . . . - - - - Reserved for future use . . . - - Other deductions (tach statement, Total deductions. Add line 12 through 26. Taxable income before net operating loss deduction and special deductions. Su Net operating loss deduction (see instructions). . . . Special deductions Schedule C, line 24). - - - - - - Add lines 29 and 200. . . . . . Taxable income. Subtract line 29c from line 28. See instructions . . . . . Total tax schedule. Part Line 11). . . - - - - - - - 2019 net 95 taxability paid (Schedule J. Part Iine 12).... . . . . Total payments, credits, and action 65 net taxability checked. Part II line 23). . . Estimated tax penalty. See instructions. Check of Form 2220 is attached . Amount owed. If line 33 is smaller than the total of 31, 32, and 34, enter amount owed - - Overpayment. line 33 is larger than the total of lines 31, 32, and 34. enter amount overpald Enter amount from line 36 you want: Credited to 2020 estimated tax 2 b 1: 31 22 33 34 35 36 and come Decor Sign Here Paid Preparer Use Only For Paperwork Reduction Fo1120 2019 Schedule C Dividends, inclusions, and Special Deductions (see instructions) 1 Dividends from lose-than-20%-owned domestie corporations other than debt financed stock Dividends from 20W-o-more-owned domestic corporations other than befinanced Stock Dividends on certain debt financed stock of domestic and foreign corporations , Dividends on certain preferred stock of less than-20N-owned public utilities Dividends on certain preferred stock of 20%-or-more-owned publice 6 Dividends from loss than 20%-owned foreign corporations and certain FSC 7 Dividends from 20%-or-more-owned foreign corporations and certain FSC . # Dividends from wholly owned foreign subsidiaries 10 Subtotal. Add lines 1 through 8. Se tructions for limitations Dividends from domestic corporations received by a small business Investment company operating under the Small Business Investment Act of 1958 . 11 Dividends from a group members 12 13 Dividends from certain FSC Foreign-source portion of dividends received from a specified 10%-owned foreign corporation excluding hybrid dividenda see instructions Dividends from foreign corporations not included on line 26, 7 11, 12, or 13 including any hybrid dividends! . . 14 15 16 100 Section 965 inclusion Subpart Fincisions derived from the sale by a controlled foreign corporation (CFC) of the stock of a lower tier foreign corporation treated as a dividend (atach Form 5471) se instructions Subpart inclusions derived from hybrid dividends of the corporations nach Forms 5471) con Other incontro CFOs under part not included on the 15. 16. 16h, or attach Form 5471) see instructions. . . - 17 Global Intangible Low-Taxed Income OLTO attach Form 5471 and Form 18 Group for foreign taxes deemed paid 10 C-DISC and former DISC dividends not included on line 1, 2, 3 20 Other dividends . . . 21 Deduction for and padon era predstock of publice - 22 93 Section 250 deduction nach Form Total d e s and inclusions. A column lines through 20. Enter here and on Total special de actions. Add columm cl. lines through 22. Enter here and on page 1. In Fm 1120 por Fom 1120 2019 Schedule J Tax Computation and Payment (See Instructions) Partl-Tax Computation 1 Check if the corporation is a member of a controlled group attach Schedule Form 11200. See instructions 2 Income tax See instructions 3 Base erosion minimum tax amount (attach Form 8991) 4 Adid lines 2 and 3. 5a Foreign tax credit attach Form 1118). b Credit from Form 3834 instructions) General business credit inttach Form 3800) d Credit for prior your minimum tax attach Form 3827) Bond credits from Fon 8912 . 6 Total credits. Add lines a through se 7 Subtract line from line 4 . . & Personal holding company tax attach Schedule PH Form 11201. . a Recapture of investment credit attach Form 4255). . b Recapture of low-income housing credit (attach Form 8611) Weros de under the look back method-completed long term contractanttach Form ). . . . . . . . d wtores de under the look back method -income forecast method attach Form d . Alternative tax on qualifying shipping activities attach Form 8902) . . L Other see instructions-attach statement) - - - - - 10 Total Address through . . . . . . . . . . . 11 Totalt. Add Ines 7, 8, and 10. Enter here and on page 1. in 31 Part I-Section 965 Payments (see instructions) 12 2010 at 965 tax ability paid from Form 265.6 Palcolumn e . Enter hare Part III-Payments, Refundable Credits, and Section 965 Net Tax Liability 13 2018 overpayment crested to 2019 - - - - 14 2019 estimated tax payments - - - 15 2019 rotund applied for on Form 4466 16 Combine lines 13, 14, and 15 - - 17 Tax deposited with Form 7004. . . . . . . . . 18 W holding see instructions . . . . . . . . 20 F undable credits from fom 2430 136. - - - - . - . - - - . - - . - . - . . . .. 20 . & 21 22 23 Other attach tomont-se instructions . Total credits. Add lines 20 through 200. 2019 65 taxability from Form -B. Put colum Total payments, credits, and section is net tax n 3. See Instructions i ty. Add lines 19, 21 and 22. Enter here and on page 1 Other specity Form 1120 2015 Schedule K Other Information (see instructions 1 Check accounting method a Cashb Accr e 2 See the instructions and enter the Business activity code no Business activity Product or service 3 the corporation a subsidiary in an d group or a parent-subsidi Yes.enter name and EN of the parent corporation 4 At the end of the tax year Did any foreign or domestie corporation, partnership including any entity treated as a partnership tutor tax-exempt organization own direct 20 or more or own directly or indirectly, SON or more of the total voting power of all classes of the corporation's wochened to "Yes complete Parti of Schedule Form 1120 c h Schedule . . Did any individual or state own directly 20% or more or own, directly or indirectly, SONO more of the total voting power of all classes of the corporation's stock entitled to vote? Yes." complete Part 1 of Schedule G Form 1120) attach Schedule At the end of the tax you, did the corporation Own direct 20N or more or own directly or indirectly, 50% or more of the total voting power of desses of stock entitled to vote of any foreign or domesticorpion not included on Form 51, Affiliation Schedule? Fors of constructive ownerships instructions complete through M o Country of Forcentage Name of Corporation werpen in b Own directly rest of 20% or more or own directly or indirectly, an interest of 50 or more in any foreign or domestic partnership including mantity treated as a partnership or in the beneficial interest of a trust? For rules of constructive ownership instructions Yes comprom below are By 6 During this tax yow, od the corporation pay dividends other than stock dividends and tributions in exchange for stock of the corporation's current and accumulated earnings and profits Section 301 and 316. Ye e Form 5452, Corporate Report of Nondividend Distributions. See the instructions for Form 5452 is considerem where for the parent corporation and on for 851 for each subsidiary. At any time during the tax yw did one for personen, diecy or indirectly t o the long powo of the corporation's lock e d to vote or a 25% of the total value of cases of the corporations Forma tion action 318. Yester The corporation may have to learn woman um ofa 25 Foreign-Owned US. Corporation or a foreign Corporation Engaged in aus. Tadore s Enter the number of Forms 472 tached . Check on the corporation public red de instruments with original discount checked the corporation may have to the Form 1981, wo on Return for Public Ofered Originale count e r En c adored during the years 10 or the number of shareholders the end of the year 100 or lower) 11 We corporation has NOL for the tax yew and is acting to forego the carryback period check here inbruction the corporation is in a considered return, the woment required by Regulations Section 1.1502-21 m be attached 12 E N OL Carrover from prior tex year net reduce by any deduction reported on Yes No For 1120 2018 Schedule K Other Information continued from page 4 13 Are the corporation's total receipts page 1. En la plus 4 through 10 for the tax year and its total the end of the tax yearless than $250,000? "Yes," the corporation is not required to complete Schedules L M-1, and M-2. Instead, enter the total amount of cash distributions and the book value of property distributions other than cash made during the tax your 14 is the corporation required to file Schedule UTP Form 1120). Uncertain Tax Position Statement? See instructions "Yes, complete and attach Schedule UTP 15 Did the corporation make any payments in 2019 that would require it to file Form 10907 You did or will the corporation foregured Form 10007 16 During this tax year, did the corporation have an 80%-or-more change in ownership including a charge due to redemption of own stock? 17 During o u t to this tax year, but before the fing of this did the corporation dispose of more than 65% by value of w i n a non- bi, orta derred transaction 18 Did the corporation receive a section 351 bransfer in which any of the stre e ts had a fair market basis or far market value of more than $1 millon? - - - - 10 During the corporation's tax yow did the corporation make any payments that would requiritto e Forms 1042 and 1042-5 under chapter 3fections 1441 through 1464) or chapter 4 sections 1471 through 1474) of the Code?. . . 20 is the corporation operating on a cooperative basis? 21 During the tax you, did the corporation pay or core any interest or royalty for which the deduction is not allowed under section 267A7 See instructions . Yes" enter the total amount of the dislowed deduction ............................ ..... 22 Does the corporation have gross recepts of 500 million in any of the preceding tax years (See sections 5 2 23 24 Yes complete and attach Fon 8991. Did the corporation have an election under section 1659 for any real property trade or business or any forming business infect during the tax year? See Instructions - - - - - - - - - - - - - - - Does the corporation is one or more of the winge rstructions The corporation owns a p roh h urrent of prior year carryov, un tres expense The corporation's aggregate average gros recepta determined under section for the tax years preces current tax year are more than 26 milion and the corporation has business interest expense The corporation is a tax while and the corporation has business interest expense Yes to wry.complete and attach Form 1000 she corporation attaching Form to certy as a unified Opportunity Fund?.. . . . Yesenter amount from Form 8906 Iine 14 , 25 Schedule L Beginning of le Balance Sheets per Books Assets TE III 2 b 3 4 5 6 7 & 9 10 Trade notes and correcte Less allowance for bad debits Inventories US government obligations Tax-exempt securities instructions Other current as wechstart Loans to shareholders Mortgage and real estate loans Other investments attach statement Buiting and other problem // tion. Los com e and into any amor 12 15 16 17 18 To bities and Shareholders' Equity Accounts payable. Mari b onds pays than you Other current b a lach statement. III 20 21 22 Mortgage rates bonds payable in year or more Other be ach watement Capital sock a Preferred stock Common stock Additional paid in capital Retained aming- A w achamento Retained winge- U rare Austments to shareholders uity w h e 23 24 25 26 RII 26 Total dah Schedule M-1 Reconciliation of Income (LOSS per Books With Income per Return The corpora r och 7 hoone recorded on backy 2 Federal income tax per bock not included on Income tax recorded on book 8 yon Deductions on this return of charged against book income is your per Depreciation Expenses recorded on bocks deducted on this retum Depreciation Charitable contributions Travel and entertaiment b Add lines and Schedule M-2 Analysis of Unappropriated Retained Earnings per Books (Line 25, Schedule Balance at beginning of your 2 Net Income per books Other in the Property Other deres 7 A ndo