Use the information in these Financial Statements and prepare a 2015 Corporate Tax return.

CORPORATION PRACTICE SET Fun Time Umbrella, Inc. Federal Tax Return FACTS Fun Time Umbrella Inc. is owned by Roland M. Fish and his wife, Fancy J. Fish. The corporation manufactures a small umbrellas for cocktails (business activity code number 339900). The corporation has reported positive financial and taxable incomes since inception. The company is located at 200 Mixer Way, Boca Raton, Florida 33431. The company's employer identification number is 98-7654321, and the calendar year is used for tax purposes. The date of incorporation was February 9, 2007. Roland M. Fish (social security number 123-45-6789) is an 81 percent shareholder and president of the company. Fancy J. Fish (social security number 111-11-1111) is a 19 percent shareholder and vice president of the company. Both persons devote 100 percent of their time to the corporation. Roland's compensation is $187,154 per year, and Fancy's compensation is $60,899 per year. The corporation is not a personal holding company. While the corporation is a 'closely-held C corporation,' it does not engage in activities to which the at-risk or passive activity loss limitations apply. The corporation files its tax return on the accrual method. Inventory has been consistently valued at Cost under the FIFO method using the full absorption procedure. Inventory capitalization rules of Internal Revenue Code Section 263A do not apply due to the 'small business exception' (average annual gross receipts for the three preceding taxable years do not exceed $10 million). The accounting records are computerized. ADDITIONAL INFORMATION 1. Fun Time Umbrella, Inc. made estimated tax payments attributable to 2015 of $30,111. The corporation also had a credit from an overpayment of its prior year Federal income taxes of $3,889 that it elected to apply against its 2015 tax liability. Apply any overpayment to 2016. 2. Ignore state income taxes. 3. Dividend income is from the following sources: Big Time Fun (Fun Time owns 75% of all outstanding stock).................. IBM Corp.(owns 12% of all outstanding stock) ..................................... Voltage, Inc. (owns 25% of all outstanding) ................................... Total ...................................................................................................... $ 7,578 3,120 17,001 $27,699 4. An analysis of the Allowance for Doubtful Accounts reveals: Balance, 01/01/15 ...................................................................................................... $38,111 2015 Transactions-Provision for bad debts ............................................................................... 4,554 Recoveries of bad debts .............................................................................. -0Accounts written off as uncollectible ......................................................... (2,877) Balance, 12/31/15 ................................................................................. $39,788 5. Goodwill of $28,425 arose on purchase of another business on 01/31/13. Amortization is not being taken for financial purposes. 6. Assume that deductions for tax depreciation (i.e., Modified Accelerated Cost Recovery) for the year total $120,787. For this practice set do not complete Form 4562 (Depreciation and Amortization). 7. $94,530 of the Accrued Wages as of 12/31/14 were paid by 3/15/15. $92,547 of the Accrued Wages as of 12/31/15 were paid by 3/15/16. The M-1 should be adjusted through the Wage Expense. 8. Contributions included: Salvation Army ............................................................................................ Committee to Elect Donald Trump, President............................................ Florida Food Bank ....................................................................................... Total ...................................................................................................... $4,123 2,000 2,100 $8,223 All contributions were paid in cash during the year except for the Food Bank contribution which was pledged by the corporation (i.e., approved by the Board of Directors) on December 2 7, 2015 and paid on March 4, 2016. In addition to the cash contributions above Fun Time Umbrella, Inc. donated inventory to a local charity. The fair market value of the inventory was 1,500 and the cost basis was 400. 9. Included in interest income is $1,050 from State of Florida General Obligation Bonds held throughout the current year. These bonds are included in the marketable securities account. 10. On 05/07/15 the corporation sold 2,580 shares of Voltage, Inc. common stock for $10,877. The stock had been purchased on 04/30/10 for $12,965. 11. Form 4626 (Alternative Minimum Tax-Corporations) must be included in the return. For that purpose, assume the adjustment for depreciation of tangible property placed in service after 1986 (Form 4626, Line 2a) is a $65,701 positive adjustment. Assume the Adjusted Current Earnings (ACE) Adjustment on Line 4e is $-0-. [This assumption removes the ACE adjustment from this practice set]. 12. Disregard any penalty on underpayment of estimated tax. f 13. Assume that compensation of officers and other salaries and wages do not relate to production activities. This assumption removes the Domestic Production Activities deduction from this practice set. REQUIRED From the above information, prepare Fun Time Umbrella, Inc.'s 2015 Federal income tax return (Form 1120), including all needed supporting statements, schedules, and forms. Unless otherwise noted, assume Fun Time Umbrella, Inc. follows the policies of making all elections to minimize its current income taxes and, to the extent possible, of conforming procedures for financial and tax accounting. Round amounts to the nearest dollar. If additional information is needed, make realistic assumptions and fill in all required data. The forms that you will need to complete include Forms 1120, 1125-A, 1125-E, 4626, Schedule D and Schedule G. These forms can be found at http://apps.irs.gov/app/picklist/list/formsPublications.html. You will complete these forms in the PDF format. Just type or neatly write in the amounts on the various lines and then print those forms off when complete. I will not accept electronic documents. Instructions to the Forms can be very beneficial in the preparation of the tax forms. The corporation's audited income statement and balance sheet for the current year, prepared by the accounting firm of Bering Beaufort, CPA's follows: Fun Time Umbrella, Inc. BALANCE SHEET For the Year Ending December 31, 2015 Beginning of Year ASSETS Current Assets: Cash & Marketable Securities Accounts Receivables Allowance for Doubtful Accounts Inventory Total Current Assets Machinery, Building and Land: Machinery Less: Accumulated Depreciation Building Less: Accumulated Depreciation Land Total Equipment, Building and Land $ 412,985 178,954 (38,111) 315,874 869,702 $ 398,774 187,954 (39,788) 305,111 852,051 $ 458,784 (175,845) 575,998 (136,557) 98,547 820,927 $ 475,880 (247,215) 575,998 (151,326) 98,547 751,884 $ Other Assets: Goodwill TOTAL ASSETS LIABILITIES AND SHAREHOLDER EQUITY Current Liabilities: Accounts Payable Accrued Wages Note Payable (less than one year) Total Current Liabilities Notes Payable (one year or more) Total Liabilities Common Stock (200,000 shares authorized, 19,702 shares issued and outstanding, $10 par) Additional Paid in Capital Retained Earnings Total Shareholders' Equity TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY Ending of Year $ 28,425 28,425 $ 1,719,054 $ 1,632,360 $ $ $ 154,787 124,530 98,541 377,858 $ 145,987 112,547 99,897 358,431 $ 329,028 706,886 $ 228,004 586,435 $ $ 98,754 589,445 323,969 1,012,168 $ $ 98,754 589,445 357,726 1,045,925 $ 1,719,054 $ 1,632,360 The corporation's audited income statement and balance sheet for the current year, prepared by the accounting firm of Bering Beaufort, CPA's follows: STATEMENT OF RETAINED EARNINGS Beginning Retained Earnings Net Income for the Year Dividend Paid in Cash Ending Retained Earnings $ $ 323,969 98,625 (64,868) 357,726 The corporation's audited income statement and balance sheet for the current year, prepared by the accounting firm of Bering Beaufort, CPA's follows: Fun Time Umbrella, Inc. INCOME STATEMENT For the Year Ending December 31, 2015 Revenue: Sales Returns & Allowance Net Sales Purchases Gross Profits Operating Expenses Officer Wages Wage Expense Rent Expense Interest Expense Penalty Expense Advertising Expense Contributions Bad Debt Expense Depreciation Expense Officer's Life Insurance Premiums Payroll Taxes Repairs and Maintenance Meals & Entertainment Miscellaneous Expense Total Operating Expenses Net Income from Operations Other Income and Loss: Dividend Income Interest Income Loss on the Sale of Stock Net Income (Loss) before Income Tax Federal Income Tax Expense Net Income $ $ $ 4,578,936 (29,887) 4,549,049 (3,329,878) $ 1,219,171 $ $ (1,114,187) 104,984 248,053 512,450 36,000 58,331 1,750 10,589 8,223 4,554 125,987 11,125 64,993 10,987 5,148 15,997 27,699 3,150 (2,088) 28,761 $ $ 133,745 (35,120) 98,625