ACNT 1347

Form 1120 Practice Tax Return

Facts in 2016:

ABC Inc. 123 Oak Dr Houston TX 77002.

EIN-74-1111111.
Date Incorporated 1/1/2000.
Total Assets $5,390,000 as of 12/31/2016.

ABC Inc.s Net Income per books is $440,000 (Hint Schedule M-1)
Gross Receipts $1,000,000
Cost of Goods Sold $400,000 (assume no beginning and ending inventory and
purchases were $400,000) (Hint Form 1125-A)
ABC Inc. received $10,000 from US Treasury Notes during 2016.
ABC Inc. uses the lower of cost or market method for valuing inventory and also
uses the FIFO method for determining the cost of goods sold. Cash method of
accounting is used for all other expenses other than inventory.
Business Activity Code is 448140 and business activity and product is retail trade
of family clothing (Hint Schedule K.)

Compensation paid to sole shareholder, John Doe. SSN-222-22-2222 was

$200,000.
Salaries and wages paid to employees were $50,000.
Office Rent paid for corporate headquarters was $20,000.
ABC Inc. contributed $60,000 to the Salvation Army, a non-profit charitable
organization. (Hint See Charitable Contributions in Chapter 16. The
contribution may be limited.)
Television advertising to promote the company products was $40,000.

ABC Inc. elected to carry over $1,250 of overpaid taxes from 2015 to 2016 (Hint
- Schedule J Part II).
ABC Inc. paid $25,000 each of 4 quarters for estimated tax payments in 2016
(Hint - Schedule J Part II).

ABC Inc. owns 10% of Better Inc., EIN: 74-3333333, a domestic corporation,
and received dividends in the amount of $100,000 in 2016. (Hint The dividends
will be reported on Form 1120 and the Dividend Deduction on Schedule C)
ABC Inc. owns 40% of Best Inc., EIN: 74-4444444, a domestic corporation, and
received dividends in the amount of $100,000 in 2016. (Hint The dividends will
be reported on Form 1120 and the Dividend Deduction on Schedule C)

ABC Inc. is a calendar year taxpayer and not affiliated with any other entity.
No dividends were declared or paid by ABC Inc.
No Forms 1099-Misc were required to be issued.
ABC Inc. has always shown a profit since inception.
 Balance Sheet information follows:

Assets: 1/1/2016 12/31/2016

Cash $ 250,000 $ 590,000
Treasury Notes $1.200,000 $1,200,000
Prepaid Income Tax $ 0 $ 100,000
Better Inc. Investment $ 200,000 $ 200,000
Best Inc. Investment $ 800,000 $ 800,000
Land $2,500,000 $2,500,000
Total assets $4,950,000 $5,390,000
Liabilities and Shareholders Equity:
Capital Stock ($100 par, 1,000 shares issued & outstanding) $ 100,000 $ 100,000
Retained Earnings $4,850,000 $5,290,000
Total liabilities and shareholders equity $4,950,000 $5,390,000

Instructions-

John Doe has engaged you to prepare the 2016 Form 1120. Use Tax ACT to prepare the
Form 1120 for ABC Inc. Tax ACT is located in Student Resources in Connect. You
will need to download Tax ACT Form 1120 Installer. If you are prompted to enter any
identification numbers, please create a number and do not use your Social Security
Number. You do not need to put your SSN # on the Form 1120. Email me ALL
completed tax forms via HCCS email by the due date.

At a minimum, the following forms need to be completed

Form 1120
Schedule C
Schedule J
Schedule K
Schedule L
Schedule M-1
Schedule M-2
Form 1125-A