XYZ is a calendar-year corporation that began business on January 1, 2020. For the year, it reported the following information in its current-year audited income statement. Notes with important tax information are provided below. Use Exhibit 16-6. Book Income $ 40,000,000 (27,000,000) $ 13,000,000 XYZ corp. Income statement For current year Revenue from sales Cost of Goods Sold Gross profit Other income: Income from investment in corporate stock Interest income Capital gains (losses) Gain or loss from disposition of fixed assets Miscellaneous income Gross Income Expenses: Compensation Stock option compensation Advertising Repairs and Maintenance Rent Bad Debt expense Depreciation Warranty expenses Charitable donations Meals Goodwill impairment Organizational expenditures Other expenses Total expenses Income before taxes Provision for income taxes Net Income after taxes 300,0001 20,0002 (4,000) 3,6003 50,000 $ 13,369,000 (7,500,000)4 (200,000)5 (1,350,000) (75,000 (22,000) (41,800,6 (1,400,000)? (70,000) 8 (500,000) (18,000) (30,000/10 (44,000;11 (140,000) 12 $12,390,0001) $ 1,979,000 (400,000/13 $1,579,000 1. XYZ owns 30 percent of the outstanding Hobble Corp. (HC) stock. Hobble Corp. reported $1,000,000 of income for the year. XYZ accounted for its investment in HC under the equity method, and it recorded its pro rata share of HC's earnings for the year. HC also distributed a $200,000 dividend to XYZ. 2. Of the $20,000 interest income, $5,000 was from a City of Seattle bond, $7,000 was from a Tacoma City bond, $6,000 was from a fully taxable corporate bond, and the remaining $2,000 was from a money market account 3. This gain is from equipment that XYZ purchased in February and sold in December (.e., it does not qualify as $1231 gain) 4. This includes total officer compensation of $2,500,000 (no one officer received more than $1,000,000 compensation). 5. This amount is the portion of incentive stock option compensation that was expensed during the year (recipients are officers), 6. XYZ actually wrote off $27,000 of its accounts receivable as uncollectible. 7. Tax depreciation was $1,900,000. 8. In the current year, XYZ did not make any actual payments on warranties it provided to customers. 9. XYZ made $500,000 of cash contributions to qualified charities during the year. 10. On July 1 of this year XYZ acquired the assets of another business. In the process, it acquired $300,000 of goodwill. At the end of the year, XYZ wrote off $30,000 of the goodwill as impaired. 11. XYZ expensed all of its organizational expenditures for book purposes. XYZ expensed the maximum amount of organizational expenditures allowed for tax purposes. 12. The other expenses do not contain any items with book-tax differences. 13. This is an estimated tax provision (federal tax expense) for the year. Assume that XYZ is not subject to state income taxes. Estimated tax information: XYZ made four equal estimated tax payments totaling $360,000 ($90,000 per quarter). For purposes of estimated tax liabilities, assume XYZ was in existence in 2019 and that in 2019 it reported a tax liability of $500,000. During 2020, XYZ determined its taxable income at the end of each of the four quarters as follows: Cumulative taxable income Quarter-end (loss) First $ 400,000 Second $1,100,000 Third $1,400,000 Finally, assume that XYZ is not a large corporation for purposes of estimated tax calculations. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.) 4. Complete XYZ Form 120, page 1 Please right click on the attached Adobe document and select open in new window. Then, download the Tax Form and enter the required values in the appropriate elds. Save your completed Tax Form to your computer and then upioad it here by clicking "Browse." Next, click "Suve." Use 2020 tax rules regardless of year on the form EXHIBIT 166 Stock Ownership and videos Received Deduction Percentage Recening Corporation Stock Ownership in Distributing Corporation Stock Dhideed Received Deducto Perontage L20 50 Mar 30 percent but few dan 10 percent O more 100 100 devine and drain corpi 300 per neline rom 1120 2019 0 Income U.S. Corporation Income Tax Return OMB No 1545-0123 For Calendar year 2019 or tax year beginning 2019, ending Department of the Try Ima ve Service Go to www.insgow Form1120 for instructions and the latest information. A Check it Name 8 Employer identification number 1a Contem tch Form TYPE buone con Number street and rooms no IPO boxectos OR dateren Date incorporated 2 Personal hiding co PRINT nach SPH Gley or town, state or province, country and Portor code Total sectional 3 Pesce el 4 Schede MadC E Crackit Initial retum Note 14 Address change 18 Gross receipts or sales 1a b Returns and allowances tb Balance Subtract Ine 1 from line la 1c 2 Cost of goods sold attach Form 1125-A) 2 3 Gross profit. Subtract line 2 from line 10 3 4 Dividends and inclusions (Schedule C, line 23 4 5 Interest 5 0 Grossrents 6 7 Gross royalties 7 8 Capital gain net income (attach Schedule D Form 11203 8 9 Net gain or loss from Form 4797, Part II, line 17 (attach Form 797 9 10 Other income instructions-attach statement 10 Total income. Add lines 3 through 10 11 12 Compensation of officers to instructions-ach Form 1125- 12 13 Salaries and was foss employment credit 13 14 Repairs and maintenance 14 15 Baddebos 15 16 Rents 16 17 Taxes and licenses 17 Interest instructions) 18 19 Charitable contributions 19 20 Depreciation from Fomh4562 not claimed on Form 1125-A or where on tummach Form 4562) 20 & 21 Depletion 21 22 Advertising 22 23 Pension profit sharing, etc. plans 23 24 Employee benefit programe 24 25 Reserved for future 25 26 Other duction attachment 26 27 Total deductions. Addlines 12 through 26 27 28 Taxable income before ret operating to deduction and spectaductions Subtractine 27 from in 11 28 23 Net operating loss deduction construction 23 b Special deduction Schedule Cine 29 23b c Add lines 29 d 200 20 30 Taxable income Subtract line 2cromine 2. Structions 30 31 Totalt Schedule. Partne11) 31 32 2019 net 965 tax by paid (Schedule, Parti, line 12) 32 33 Total payment, credits, and section et ability Sched. Partine 22 33 34 Estimated tax penalty See Instructions. Check Form 220 ched 34 35 Amount owed. We than the total ofinus 31.22. and towed 35 35 Overpayment. Wine 33 is larger than the total of 31, 32, 34, mounted 36 37 Enter amount from line 38 you want. Credited to 2020 imated to Funded Deductions (See Instructions for limitations on deduction) Sign Here M who So Y No PEN Signature of De Paid Perrorsum Preparer Use Only Festa Firms For Paperwork Reduction Act Notice, separate trons. C1150 Form 112001