Using the attached information for Melodic Musical Sales in. prepare full and complete tax return for 2020 using the forms in irs.gov. The return should be as if sent to the IRS - I am the IRS Accepting Center, any omission will be reflected in your grade! No software is allowed and no points for software preparation would be given. So in the following pages you should use only the information for the firm.

ZOOM + c. Should Barton employ Mike's wife Elaine for $50,000 rather than increase Mike's sal- ary? Take into consideration employment taxes as well as federal income taxes. Note, that Elaine's salary would be well below the Social Security cap, so that she and the corporation each would incur the full amount of payroll taxes with the corporate por tion being deductible. Both Elaine's and the corporation's portion is 7.65%. 03-65 Rho Corporation owns 22% of Divvy Corporation's stock. Divvy has paid Rhe $100,000 in dividends for the current year with the last dividend payment made on December 15. Rho is doing some year-end tax planning, and, as of now, expects an operating loss of $35,000 not counting the dividend income. Thus, Rho expects $65,000 $100,000 - $35,000) of taxable income before the dividends-received deduction a. Calculate Rho's expected taxable income and tax liability for the current year using the given facts. b. Given the result in Parta, what year-end tax planning strategies can you suggest to improve Rho's benefit of the dividends-received deduction for the current year? TAX FORM/RETURN PREPARATION PROBLEMS C:3-66 Melodic Musical Sales, Inc. is located at 5500 Fourth Avenue, City, ST 98765. The corporation uses the calendar year and accrual basis for both book and tax purposes. It is engaged in the sale of musical instruments with an employer identification number EIN) of XX-2020018. The company incorporated on December 31, 2014, and began business on January 2, 2015. Table C 3-3 contains balance sheer information at January 1, 2018, and December 31, 2018. Table 6:3-4 presents an unaudited GAAP income state- ment for 2018. These schedules are presented on a book basis. Other information follows the tables. TABLE C33 Melodic Musical Sales, Inc.-Book Balance Sheet Information du December 31, 2018 Debit Credit Account DO Cash Accounts receivable Alowance for doublu accounts Inventory Investment in corporate stock Investment in municipal bonds Cash surrender value of insurance polic Land Buildings Accumulated depreciation Buildings Equipment Accumulated depreciation Equipment Trucks Accumulated depreciation-Trucks Accounts payable Notes payable short-term) Accrued payroll taxes Accrued state income taxes Accrued federal income taxes Bonds payable long-term Net deferred tax liability Capital stock-Common Retained earnings-Unappropriated Totals $ 815,494 500,000 $ 25,000 3,500,000 50,000 30,000 80,000 200,000 2,000,000 100,000 140,000 1,100,000 187,500 205,000 100,000 30,000 50,000 300,000 270,000 800,000 540,000 14,880 18,600 4,500 7,500 2,500 77,361 1,800,000 600,000 57,394 167,593 1,500,000 1,500,000 2,000,000 4,674.440 56,816,774 56,816,774 $8,375,494 $8,375,494 C - ZOOM + TARLECH -Book Income Statement 2018 ws 250,000 14,500,000 : DE COP ka@fau.edu ili (at the 34% tax ZOOM + 3-62 Corporations Chapter 3 Line 9(a) Check ) (b), (c) & (d Not applicable (e) & (1) No Compensation of Officers (Form 1125-E) lol (d) Mary Travis XXX XX XXXX 100% 50%. $290,00 John Willis XXX-XX-XXXX 100% 25% 180,000 Chris Parker XXX-XX-XXXX 100% 25% 180,000 Tocal $650,000 Bad Debts: For tax purposes, the corporation uses the direct writeoff method of deducting bad debts For book purposes, the corporation uses an allowance for doubtful accounts. During 2018, the corporation changed $40,000 to the allowance account, such amount represent- ing actual writeoffs for 2018 Additional Information Schedule K). 1 b Accrual 2 a 451140 b Retail sales Musical instruments 3 No 49 No b Yes; omit Schedule G Sa No b No 6-7 NO No Do not check box 9 10 11 12 13-14 15 a b 16-23 24 Fill in the correct amount 3 Do not check box Not applicable No No Do not che box No Yes 25 Organizational Expenditures: The corporation incurred less than $5,000 of organizational expenditures in the year it began business. For book purposes, the corporation expensed the entire expenditure. For tax purposes, the corporation elected under Sec. 248 to deduct the entire amount of ex penditures in the year it bean business. Therefore, o amortization expenditures appear in the tax retum or book financial statements for the current year. Capital Gains and Losses: The corporation sold 100 shares of PDQ Corp. common stock on October 8, 2018, for $145,000. The corporation acquired the stock on December 15, 2017, for $90,000 The corporation also sold 75 shares of JSB Corp.common stock on June 18, 2018, for $110,000. The corporation acquired this stock on September 18, 2016, for $120,000. The corporation has a $15,000 capital loss carryover from 2017. These transactions were not reported to the corporation on Form 1099.. Fixed Assets and Depreciation For book purposes. The corporation uses straight-line depreciation over the useful lives of assets as follows store building, 50 years, equipment, ten years, and trucks, five years. The corporation takes a half-year's depreciation in the year of acquisition and the year of disposition and assumes no salvage value. The book financial statements in Tables C.3-3 and C 3-4 reflect these calculations. For tax purposes. All assets are MACRS property as follows store building, 39.year nonresi dential real property, equipment, seven year property, and trucks, five-year property. The corporation acquired the store building for $2 million and placed it in service on January 2, 2015. The corporation acquired two pieces of equipment for $250,000 Equipment 1) and $500,000 (Equipment 2) and placed them in service on January 2, 2015. The corpora tion acquired the trucks for $100,000 and placed them in service on July 18, 2016. The tracks are not listed property and are not subject to the limitation on luxury automobiles. 0 ZOOM + The Corporate Income Tax