Question;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 company?s 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 company?s 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 corporation?s 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).
Paper#42863 | Written in 18-Jul-2015Price : $62