Complete celebrity catering service inc form 1120

Assignment Help Taxation
Reference no: EM131381805

CCS Corporate Tax Return Problem

Rachael Ray, Paula Deen and Gordon Ramsay each own one-third of the common stock of Celebrity Catering Services, Inc. (CCS). CCS was incorporated on February 2, 2009. It has only one class of stock outstanding and operates as a C corporation for tax purposes. CCS caters to all types of social events.

CCS is located at 540 Waverly Way Burbank, CA 91501

Its employer ID is 38-4743474

CCS's business activity is catering food services. Its business activity code is 722300.

The shareholders also work as officers for the corporation as follows:

  • Rachael is the chief executive officer and president, (SS# 231-54-8976). Her salary this year is $180,000.
  • Paula is the executive VP and Chief operating officer (SS#798-56-3241). Her salary this year is $120,000.
  • Gordon is the VP of Finance (SS# 879-21-4536). His salary this year is $150,000.

All officers devote 100% of their time to the business and all of the officers are US citizens.

CCS uses the accrual method of accounting and has a calendar year-end.

CCS made four equal quarterly estimated tax payments of $36,500 each. Its tax liability last year was $125,800. If it has overpaid its federal tax liability, CCS would like to receive a refund.

In the prior year, the company made a large charitable contribution. $43,000 of that contribution exceeded the amount deductible and was carried forward to the current year.

CCS paid a dividend of $30,000 to each of its shareholders on November 1. CCS had ample earnings and profits (E&P) to absorb the distribution.

Income Statement

Income



Sales


$2,600,000

Sales returns and allowances


(5,000)

Net sales


2,595,000

Cost of goods sold


450,0001

Gross profit


2,145,000

Capital loss


($17,000)

Dividend income


25,0002

Interest income


8,0003

Total income


$2,161,000

Expenses



Salaries-officers

$450,000


Salaries and wages - other

625,000


Bad Debt

15,000


Meals & Entertainment

28,000


Repairs and Maintenance

6,000


Property Taxes

13,000


State Income Tax

23,000


Payroll Taxes

107,500


Charitable Contribution

15,500


Equipment Rent

20,000


Warehouse Rent

220,000


Interest

5,0004


Advertising

62,000


Professional Services

15,000


Depreciation

10,0005


Employee benefits Programs

53,040


Other Miscellaneous Expenses

15,2006


Total expenses


1.683,240

Net income before taxes


$477,760

Federal income taxes


[161,180]

Net income after taxes


$316,580

Balance Sheet

Assets

1/1/2016

12/31/16

Cash

$180,000

$251,760

Trade and accounts receivables

560,000

570,000

Allowance for Doubtful Accounts

(60,000)

(54,000)7

Inventories

140,000

150,000

U.S. government bonds

20,000

20,000

State & Local bonds

120,000

120,000

Investment In Stock

400,000

353,0008

Prepaid Federal Income Taxes

0

1,686

Property, plant and equipment

140,000

160,000

Accumulated depreciation

(50,000)

(60,000)

Other assets

20.000

45,000

Total Assets

$1,470,000

$1,557,446

Liabilities and Owners' Equity



Accounts payable

$280,000

$130,000

Income Taxes Payable

5,000

0

Deferred Tax Liability

10,000

26,866

Other current liabilities

5,000

21,000

Other Liabilities

40,000

23,000

Capital stock

400,000

400,000

Retained earnings

730,000

956,580

Total Liabilities and Owners' Equity

$1,470,000

1,557,446

Required:

Complete Celebrity Catering Service Inc.'s (CCS) Form 1120 and all related schedules. Be sure to attach schedules for any line item which indicates one is required on the 1120.

FORM 4562 is not required. (Do not complete Form 4562 [depreciation calculation] since you do not have all the information).

If any information is missing, use reasonable assumptions to fill in the gaps and list those assumptions as an attachment.

The forms schedules and instructions can be found at www.irs.gov and download the necessary forms.

Reference no: EM131381805

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