What forms(from the irs website) are required to complete the entire tax return for 2018?
PRINTED RY. smatraka(@ fan ech Printing ie for personal, private use only No part of this honk may he reproduced or transmitted withant pushlicher's prior permission. Violators will be prosecuted. 3-80 Corporations . Chapter 3 . Should Barton employ Mike's wife Elaine for $50,000 rather than increase Mike's sal; are T Take into consideration car that Elaine's salary would he well below the Social Security cap, so that she and thi corporation each would incur the full amount of payroll taxes with the corporate por- tion being deductible. Both Elaine's an 's and the corporation's portion is 7.65%. TAX FORM/RETURN PREPARATION PROBLEMS 013-65 Musical Sales, Inc. is located at 5500 Fourth Avenue, City, ST 98765. The cor poration uses the calendar year and ace and accrual basis for both book and tax purposes. I the sale of musical instruments with an XX-2019017. The company incorporated on December 31, 2013, and be identification mambe amber (EIN) of January 2, 2014. Table C:3-3 contains balance sheet inform ta, and began business or December 31, 2017. Table C:3-4 presents an unaudited GAAP income statement for 2017 These schedules are presented on a book basis. Other information follows the tables. Estimated Tax Payments (Forme 22 20): The corporation depo in deposited estimated tax payments as follows; April 15, 2017 $100,001 Jume 15, 2017 200,000 September December 15, 2017 235,00 235,000 Total $770,000 lastable income in 2016 was $1.4 million, and the 2016 tax was $476,000. The corpora tion earned its 2017 taxable income evenly throughout the year. Therefore, it does not use the annualisating ar scash al methods. T TABLE C-3-3 Melodic Musical Sales, Inc-Book Balance Sheet Information January 1, 2017 December 31, 2017 Account Debit Credit Credit Cash 459.491 5 953.648 3410,000 425.0 Allowance for doubt 17,000 2.975,000 $ 21,250 2 125,000 Insweetment in corporate stock 282, 000 50,D00 Inmidlament in municipal bonds 30,000 30,000 90 000 Land 000.000 300,000 1000.DOO accumulated depreciation-Buildings 50,000 Equip 500,000 900.000 Arregulated depreciation-Equipment 150.000 165,00 100,000 100.000 Accumulate ited depmoats Accounts payable Notes payable (short-term) 700,000 Accrued payroll taxes 12,648 15,81 Accrued state incorme taxes Accrued federal income taxes Bonds payable Jong-term] 400,000 900 000 Net deferred tax liability 134,715 Capital stock-Common Betain carpinng 1700 000 530,0 Paidin earnings Unappropriated 3,566,551 Tolak 15 286.491 55.286.491 56.813.648 $6.813, 648W/15/2018 Pearson' s Federal Taxation 2019 Corporations, Partnerships, Estates & Trusts PRINTED BY: smatraka@ fau.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violatora will be proaccuted. The Corporate Income Tax . Corporations 3-61 Inventory and Cost of Goods Sold (Form 1125-A): he corporation uses the periodic inventory method and prices its inventory using the lower of FIFO cost or market. Only beginning inventory, ending inventory, and purchases should be reflected on Form 1 125-A. No other costs or expenses are allocated to cost of goods sold. Note: Assume the corp e corporation is exempt from the uniform capitalization (UNICAP) rules. Line 9 (a] (bj, [c) & (d) Check (#) Not applicable No Compensation of Officers (Form 1125-EN Mary Travis XXX-XX-XXXX XXX-XX-XXXX 50% 5246,500 John Chris Parker 100% 25% XXX-XX- 153,000 153,000 Total $552,500 Bad Debts: For tax purposes, the corporation us ation uses the direct writeoff method lethod of deducting bad debts. ook purposes, the corporation uses an allowance for doubtful accounts. During 2017, the corporat arged $3 personE- ing actual writeoffs for 2017. TABLE C:3-4 Melodic Musical Sales, Inc.-Book Income Statement 2017 Sales $ 8,500, 000 (212,509) Net sales 8.287.500 Begin niring inwenton 12,125,000 Purchases 4,675,000 Ending (2,975,000) Cost of goods sold (3 525,000] Gross profit 54 46 462,500 Depreciation 5 115,00 Repairs General in 46.750 Net premium-Off 25,50 Officers" compensation $52,509 Other salaries 340,000 Utilities Adwrthing 61,200 40,800 Legal and accounting too 42.500 chentable contributions 25,500 Payroll taxes 52,700 merest expense 178.504 Bad d debt exp 38 250 Total expenses (1 536, 880) Gain on sale of e of equipment interest on municipal bond Net gain on stock sales Dividend income 23,00 10.20 Net income before income tase $ 3,084,070 ederal income tax expense State income tax experge Plet income $2 051, 551W/15/2018 Pearson'.s Federal Taxation 2019 Corporations, Partnerships, Estates & Trusts PRINTED BY: smatraka@ fau.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. 3-62 Corporations & Chapter 3 Additional Information (Schedule K): Accrual 451140 Do not check bux Retail sales Fill in the correct amount Musical instruments Do not check box No Nor applicable No Nut app cab Tes; omit Schedule G Do not check box 6.7 No Organizational Expenditures: The corporation incurred less than $5,000 of organizational expenditures in the year began business. For book purposes, th ed the en tax purposes, the corporation elected under Sec. 248 to deduct the entire amount of ex penditures in the year it began business. Therefore, no amortization expenditures appear in the tax return or book financial statements for the current year. Capital Gains and L The corporation sold 100 shares of PDQ Corp. common stock on October 7, 2017, fo $125,000. The corporation acquired the stock on December 15, 2016, for $95,000. The corporation also sold 75 shares of J5B Corp. common $110,000, The corporation acquired this stock on Sept unmon stock on June 17, 2017, for Back on September 18, 2015, for $1 17,000. The corporation has a $10,000 capital loss carryover from 2016. These transactions were no reported to the corporation on Farm 1099-B. Fixed Assets and Depreciation: For bonk 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, Th 2014 acquired the store building for $1 million corporat equipmen rvice on J $400,000 (Equipenent 2) and placed them in service on January 2, 3 y 2, 2014. The corporation acquired the trucks for $100,000 and placed them in service on July 18, 2015. The trucks are not listed property and are not subject to the limitation on luxury automobiles. The corpora- tion did not make the expensing elects g election under Sec, 179 or take bonus depreciation on any property acquired quired before 2017. Accumulated tax depreciation through December 31, 2016 on these properties is as follows: Store building Equipment 1 Equipment 2 225,080 Truck 52.000 On October 16, 2017, the 7. the corporation sold for $230,000 Equipment 1 ment 1 that originally cost 200,000 on January 2, 2014. The corporation had no Sec. 1231 losses from pric s. In a separate transaction on October 17, 2017, the corporation acquired and place in service a piece of equipment costing $500,000. Assume these two transactions do not quality as a like-kind exchange. The new equipment is seven-year property. The corpora- tion made the Sec. 179 expensing election with regard cost of this property. Where a regard to the new equipment for the entire Where applicable, use published IRS depreciation tables to compute 3017 depreciation ( reproduced in Appendix C of this text).The Corporate Income Tax . Corporations 3-63 Orber Information: The corporation's tax rate in 2017 was 34%. The corporation's activities do nes qualify for the U.S. production activities deduction. Ignore the AMT and accumulated earnings tax. The corporation ration received dividends (see Income Statement in Table C:3-4) from tax- able, domestic corporations, the stock of which Melodic Musical Sales, Inc. owns les than 20%. The dividends-received deduction percentage in 2017 was 70% for less than 20%-owned property. The corporation paid $85,000 in cash dividends to its shareholders during the year and charged the payment directly to retail to retained earnings. The state income tax in Table C:3-4 is the exact amount of such taxes incurred during the year. The corporation is not entitled any credits. Ignore the financial statement I statement impact of any underpayment penalties incurred on the tax return. Required: Prepare the 2017 corporate tax return for Melodic Musical Sales, Inc. along with any necessary supporting sch ing schedules. Optional: Prepare both Schedule M-3 (but omit Schedule B and Form 8916-A) and Sched- ule M-1 even though the IRS does not require both Schedule M-1 and Schedul Schedule M-3. Note to Instructors See solution in the Instructor's Resource Manual for other optional information to provide to students. C:3-66 Permtemp Corporation formed i home statement and balance sheet. armed in 2016 and, for that year, reported the following book tax assets, and deferred t ance sheet, excluding the federal income tax expense, def Sales $20,000,000 Cost a (15,000,000 Gross profit $5,000,000 Dividend inco $0.000 Tax-exempt interest income 15.000 Total income $ 5,065,000 Expenses: Depreciation 200,909 Bad de 400.004 Charitable contributions 100,000 Interest Meals an tertainment 475,000 Other 3.855,000 Total expenses 15,675,000 Net loss before federal income taxes (610,00.0 Cash 500.000 Accounts receivable $ 2,000,000 Allowance for doubtf (250.000 1,750,000 nven 4.000.00 Fixed assets $10,000,000 Accumulated 1800.000 9.200,000 Investment in corporate stock 1.000.000 investment in tax-exempt bond 50.000 Total assets $16 500.000 Accounts payable 2,610,000 Long-term debt 8.500,00 Com Retained earnings 6,000,000 Total liabilities and equity (610,4 $16.500.00 https:/bookshelf. vitalsource.com/it/books/9780134692654/chi/16454/4 @0.00:0.00 2/2
