Attachment # 00001078 - Corporation+Tax+Return.doc
Corporation+Tax+Return.doc (34.5 KB)
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John Smith, David Daniels, Mark Miller, and Judy Butler are equal owners in PLUS, Inc. a corporation engaged in HR consulting. Pertinent information regarding PLUS is summarized below. Social security numbers are as follows John 558-98-4523 David 345-63-5467 Mark 234-91-1450 and Judy 677-77-1678. John is the President of the company. The address of the company is 11 Juniper St., Wilmington, NC 26812. The company was incorporated and began operations on January 1, 2007. The business code is 561900. The federal identification number is 68-1894875 The company uses the cash method of accounting and the calendar year for reporting. The company claimed 8,119 depreciation for book purposes, but 11,619 for tax purposes (under a MACRS methodology). Assume none of the depreciation creates a tax preference or adjustment for AMT purposes. The company is NOT a personal holding company. All loan borrowings were used exclusively for acquisition of equipment, consequently, all interest is considered business interest. No compensation was paid to Daniels, Miller, or Butler, but each of the four owners withdrew 35,000 as a dividend of operating profits. There was no distribution of any non-cash property. The equipment loan is nonrecourse debt to the owners. All initial equity contributions were paid equally and each individual owns 25 of the common stock. None of the shareholders sold any portion of their ownership interests during the year. The company has no available tax credits and is not subject to AMT. The companys operations are entirely restricted to the local geographic area in North Carolina. All owners are U.S. citizens. The company had no foreign operations, no foreign bank accounts, and no interest in any foreign trusts or other corporations. The company is not publicly traded. The company is not subject to the consolidated audit procedures. The company files its return in Cincinnati, OH. John Smith lives at 819 Azalea Dr., Wilmington, NC 26811, David Daniels lives at 800 Daffy Dr., Wilmington, NC 26812 Mark Miller lives at 250 Lakewood Rd., Wilmington, NC 26812 and Judy Butler lives at 170 Camilla Ave., Wilmington, NC 26812. The companys marketable securities represent small investments (1) in a number of publicly traded companies and mutual funds. The company sold its holdings of AIM Corporation (carried as Marketable Securities on the balance sheet) on October 15 for 5,000. The corporation purchased this investment several years ago for 9,000. (The proceeds from this sale are listed as a cash receipt below. The company has no prior-year capital gains or losses.) The current income statement for the company reflected book net income of 143,900 AFTER book depreciation has been taken on the equipment, and the loss on the sale of JUNE Mutual Fund, and 60,000 of recorded federal income tax expense. The following information was taken from the corporations financial statements for the current year. Cash Receipts Fees collected 755,000 Taxable qualified dividend income 4,600 Taxable business interest income 1,400 Tax Exempt interest 2,600 Proceeds from sale of XYZ Corp. common stock 5,000 Total Receipts 768,600 Cash Disbursements Compensation to Rick Sternberg 120,000 Dividend payments to shareholders (35K each) 140,000 Customer Refunds 3.000 Office Rent 26,000 Utilities 6,700 Administrative employee salaries 310,000 Federal income tax payments (15K/Qtr.) 60,000 Business Professional Licenses 2,000 Cash Contribution to United Way (a 50 org.) 1,000 Meals Entertainment (100) 2,600 Travel 9,000 Office supplies expense 10,481 Accounting (Professional) fees 10,000 Advertising 5,000 Taxes (Payroll, State, Local) 29,600 Business interest (on equipment loan) 4,000 Principal payments on equipment loan 15,000 General Liability Insurance Expense 3,200 Equipment rental 5,000 Total Disbursements 762,581 Journal entries have been made to record regular (book) depreciation in the amount of 8,119. MACRS tax depreciation was not recorded in the book records. Principle payments against the equipment loan amounted to 15,000 for the year. The balance sheets (book basis) for the company were as follows for the current year Account January 1, 201x December 31, 201x Cash 86,576 Tax-exempt securities (at cost) 52,000 52,000 Marketable Securities (at cost) 120,000 111,000 Office furniture equipment 65,000 65,000 Accumulated depreciation ( 36,576) ________ Total assets 287,000 Nonrecourse equipment loan 47,000 32,000 Common Stock 48,000 Retained Earnings 192,000 _______ Total liabilities and capital 287,000 REQUIRED 1. Prepare a Form 1120 for the corporation including Form 4562. (Do NOT prepare a state return). Prepare supporting schedules as necessary if adequate information is provided. (Hint If you use a tax software program, you may override the Form 4562 with asset and current and accumulated depreciation entries). 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    Tutorial # 00011298 Posted By: mac123 Posted on: 04/07/2014 09:30 PM
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