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ACC Tax Return Two Cases

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Question;For this assignment, you will complete two tax returns;(Corporation Return and Partnership Return), for 175 points each. You may use;the tax software found athttp://accountants.intuit.com/tax/proseries/Please note there is a limit of 5 returns per session.PART I ? Tax Return #1, Corporate ReturnBackgroundJane Collier, James Taye, and Steve Allwine each own;one-third of the common stock of Tasty Treats and Beverages. The corporation;was incorporated on April 3, 2004. It has only one class of stock outstanding;and operates as a C corporation for tax purposes. Tasty Treats and Beverages;caters kid-friendly social events.? Located at 1215 Blue Horizon, Dallas, TX 12234.? Employer Identification Number is 12-34567890.? Business activity is catering food. Its business activity;code is 722300.? The shareholders also work as officers for the corporation;as follows:o Jane is the chief executive officer and president (Social;Security number 242-62-5786).o James is the executive vice president and chief operating;officer (Social Security number 563-58-8923).o Steve is the vice president of finance (Social Security;number 575-58-1572).All officers devote 100% of their time to the businessAll officers are U.S. citizens.Use the accrual method of accounting and have a calendar;year-end.Four equal estimated tax payments of $28,000 each quarter.;Its tax liability last year was $85,000.If it has overpaid its federal tax liability, the;corporation would like to receive a refund.Dividend paid of $20,000 to its shareholders on October 1.;The Corporation had ample earnings and profits (E&P) to absorb the;distribution.FINANCIAL StatementsTasty Treats and Beverages, Inc.Income StatementFor year ended December 31, 2013Revenue from sales1,500,000Sales returns and allowances(25,000)Cost of goods sold(325,000)Gross profit from operations1,150,000Other Income:Capital loss(7,500)Dividend income15,000Interest income12,000Gross income1,169,500Expenses:Compensation(750,000)Depreciation(12,000)Bad debt expense(7,800)Meals and entertainment(3,000)Maintenance(2,500)Property taxes(10,000)State income taxes(30,000)Other taxes(11,000)Rent(28,000)Interest(7,300)Advertising(6,200)Professional services(5,000)Employee benefits(8,000)Supplies(2,500)Other expenses(1,750)Total expenses(885,050)Income before taxes284,450Federal income tax expense96,713Net income after taxes187,737??Tasty Treats and Beverages, Inc.Balance SheetDecember 31, 2013ASSETSJanuary 2013December 2013Cash175,000190,000Accounts Receivable63,00054,000Allowance for doubtful accounts(8,000)(7,000)Inventory225,000275,000US government bonds30,00025,000State and local bonds50,00050,000Investments in STOCK325,000335,000Fixed assets475,000485,000Accumulated depreciation(198,000)(215,000)Other assets11,00012,000Total assets1,148,0001,204,000Liabilities and Stockholder's EquityAccounts payable225,000200,000Other current liabilities135,00055,000Other liabilities75,00068,263Capital stock250,000250,000Retained earnings463,000630,737Total liabilities and stockholder's equity1,148,0001,204,000? Additional Informationo Inventory-related purchases during 2013 were $175,000. It;values its inventory based on cost using the FIFO inventory cost flow method.;Assume the rules of ?263A do not apply.o Of the $12,000 interest income, $1,500 was from a City of;Dees bond that was used to FUND public activities (issued in 2011), $1,750 was;from an Border city bond used to FUND private activities (issued in 2004);$2,500 was from a U.S. Treasury bond, and the remaining $6,250 was from a money;MARKET account.o Dividend income came from ABC Inc. Owned 10,000 shares of;the STOCK in ABC Inc. at the beginning of the year. This represented 10 percent;of outstanding STOCK.o On September 1, 2013, the corporation sold 1,000 shares of;its ABC stock for $15,000. It had originally purchased these shares on June 13;2006, for $7,500. After the sale, the Corporation owned 9 percent of ABC.o compensation is as follows:? Jane $175,000? James $150,000? Steve $150,000? Other $275,000o The Corporation wrote off $10,000 in accounts receivable;as uncollectible during the year.o Regular tax depreciation was $28,000. None of the;depreciation should be claimed on Form 1125A.o The $7,300 interest expense was from a business loan.o Other expenses include $3,000 for premiums paid on term;life insurance policies for which Tasty Treats and Beverages, Inc. is the;beneficiary. The policies cover the lives of Jane, James, and Steve.**************PART II ? Tax Return #2, Partnership Return (Form 1065, only;Page 1 and Schedule K required)BackgroundThe Rowdy Fun is a limited partnership and was formed on;June 1, 2005, by Thomas Kyle, its general partner, and two other limited;partners when they each contributed an equal amount of cash to start the new;enterprise. Rowdy Fun is an outdoor equipment retailer focused on selling;outdoor activities gear. Thomas has a 33.33% profits and capital interest and;the limited partners hold the remaining 66.66% of the profits and capital;interests. Their profits and capital interests have remained unchanged since the;partnership was formed. Thomas is actively involved in managing the business;while the limited partners are simply investors.? Rowdy Fun is located at 8955 Golden Drive, Sunnydale, AZ;34592.? The employer identification number for Rowdy Fun is 47-8593563.? Rowdy Fun uses the accrual method of accounting and has a;calendar year end.? Thomas' address is 853 Crystal Drive, Sunnydale, AZ 34592.Additional Information? Rowdy Fun has total assets of $1,900,000 and total;liabilities of $550,000 at the beginning of the year and total assets of;$2,300,00 and total liabilities of $725,000 at the end of the year.? Partnership liabilities consist of accounts payable, and;Thomas, as general partner, is legally responsible for paying these liabilities;if the partnership does not.? Five years ago, Rowdy Fun purchased an original outdoor;statue with the intent for display in the store. In 2013, the statue was sold.;The $15,000 recognized gain from the sale is reflected in the income statement.? For tax purposes, Rowdy Fun has consistently elected under;Section 179 to expense any furniture or fixtures purchased every year since it;was formed. There is no tax basis in any of its depreciable assets. This year;Rowdy Fun expensed $23,000 of signs and display cases for tax purposes.? On November 20th, Rowdy Fun distributed $90,000 ($30,000;per partner) to the partners.? Miscellaneous expenses include a $1200 fine for violating;a local ordinance.? Rowdy Fun maintains its books using generally accepted;accounting principles.FINANCIAL StatementsRowdy FunIncome StatementFor year ended December 31, 2013Sales975,000Sales returns and allowances(25,000)Cost of goods sold(300,000)Gross profit from operations650,000Other Income:Interest from Money MARKET3,500Gain for sale of statue15,000Gross income668,500Expenses:Employee wages(125,000)Interest on accounts payable(2,000)Payroll and property taxes(45,000)Supplies(26,000)Rent on retail building(20,000)Depreciation on furniture and fixtures(15,400)Advertising(4,000)Guaranteed payments to Thomas Kyle(40,000)Utilities(16,000)Accounting and legal services(5,000)Meals and entertainment(500)Charitable Contributions(375)Miscellaneous expense(425)Total expenses(299,700)Net Income for Books368,800;="msonormal">="msonormal">

 

Paper#40520 | Written in 18-Jul-2015

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