Reference no: EM131684379
Master Corporation 1
Master Corporation, an accrual- based calendar year taxpayer had a gross sales of $250000 in 2016. Of those sales, $2000 of goods were returned by their customers for various reasons.
Master corporation also agreed to give $500 in credits to customers for goods which were received ( but kept by customers) in less than pristine condition.
On August 4, Master Corporation sold a vacant factory to an unrelated party for $3000 which it had purchased on october 15,1990. The factory had an original cost of $1000 and over the years was given $750 in capital improvements. Accumulated depreciation (which was the same for books and tax) in the date of sale was 1,150. Broker and other expenses on the sale amounted to $200. The purchaser agreed to pay Master Corporation $1000 each in 2016, 2017,and 2018.
Required: Complete form 1120 lines 1(a), 1(b) and 1(c) and form 6252.
Master Corporation 2
Master Corporation values closing inventory at cost using FIFO and made no changes in accounting for inventory during 2016. You have calculated that Master Corporation had $6000 of Section 263(a) costs in 2016 and that $800 of these costs belongs in the ending inventory.
On the 2015 tax return , you see that the ending inventory on the balance sheet ( Schedule L ) was $40000 but on Schedule A ( Cost of Goods Sold) it was listed as $ 41200.
Required: Complete Schedule A of Form 1120 plus lines 2 and 3 of Form 1120, page 1.
In addition, Schedule M-1 would reconcile as follows;
Net income per books $225
Add: Expenses recorded on books this year not deducted:
263(A) costs included in December 31,2016 inventory 40
Less: Deductions in this return not charged against book income this year: 263(A) costs included in December 31,2015 inventory (15)
Income per tax return $250
Master Corporation 3
During 2016, the Master Corporation received dividend income of $5000 from a corporation that is 10% owned. In addition, the corporation received a $10000 distribution from Minor Corporation , a non- consolidated subsidiary.
The Master Corporation reported the following interest income for the ended December 31, 2016:
State of New York Bonds $300
|
U.S. Treasury Notes
|
500
|
|
Certificate of Deposit
|
180
|
|
City of Albany Bonds
|
100
|
|
XYZ Corporation Bonds
|
350
|
|
|
$1430
|
The Master Corporation is a limited partner in XYZ partnership. Master Corporation received a Schedule K-1, " Partner's share of income, Credits, Deductions, ETC" for the partnership year ended December 31, 2016.
Requirements:
1. Complete Schedule C, Column (a) and line 4 of form 1120.
2. Complete lines 5 and 10 of Form 1120.
Master Corporation 4
Master Corporation sold the following assets in 2016 in addition to the factory mentioned in problem #1
|
Asset
|
Sales Price
|
Cost
|
Tax Depr.
|
Book Depr.
|
Purchased
|
Sold
|
|
Building
|
200,000
|
150,000
|
62,500
|
52,500
|
1/1/94
|
12/16
|
|
Equipment
|
100,000
|
500,000
|
450,000
|
425,000
|
1/1/97
|
12/16
|
|
Furniture
|
10,000
|
50,000
|
50,000
|
45,000
|
7/31/99
|
10/16
|
Requirement: Complete Schedule 4797. Carry the results to other parts parts of Form 1120 as required.
Master Corporation also recorded 2,000 in net short-term capital gains on its December 31,2016 income statement. The Corporation marks all of its investment to market for book purposes.
At December 31, 2016 Master has $500 of unrealized short-term gains. At December 31, 2015 Master had $150 of unrealized short-term losses.
Requirements: Complete Schedule D. Carry the results to other parts of Form 1120 as required.
Master Corporation Problem # 5
The Master Corporation lists the following expenses on its income statement for the year ended December 31, 2016:
|
Salaries ( including accrued bonuses)
|
$155,000
|
|
Repairs
|
2,000
|
|
Bad debt Expense
|
8,000
|
|
Federal Income Tax
|
35,000
|
|
New York State Income Tax
|
15,000
|
|
Officers Life Insurance
|
5,000
|
|
Federal Payroll Tax
|
4,300
|
|
Office Expense
|
5,000
|
|
Meals & Entertainment
|
7,000
|
Additional Information:
1. Master has two officers, John Jones ( who owns 30% of Master's common stock) earned
$30,000 and Mary Smith ( who owns 15% of Master's common Stock) earned $25000. Bonuses ( included in the salary expense above) to John and Mary were also accrued at December 31, 2014. John's bonus of $2000 was paid on April 1, 2016. Mary received half of her $2000 bonus on February 1, 2017 and the other half on April 1, 2017.
2. Master's Reserve for Bad Debts was $2000 and $1,800 on December 31, 2016 and 2015, respectively.
3. Master paid $5000 for an ultra- extravagant officer's party. This amount is included in Meals and Entertainment.
4. Beneficiary of the officer's life insurance is Master Corporation.
Requirement: Complete the applicable lines on Form 1120.
Master Corporation Problem #6
The Master Corporation's Fixed Asset Schedule for tax purposes is as follows:
|
Assets
|
Date Acquired
|
Method
|
Years
|
Cost
|
|
Leasehold Imp.
|
07/01/97
|
S/L
|
30
|
$1,000
|
|
Leasehold Imp.
|
07/01/97
|
MACRS
|
31.5
|
2,000
|
|
Furniture
|
01/01/14
|
MACRS
|
7
|
500
|
|
Technical Equip.
|
03/01/16
|
MACRS
|
5
|
1,000
|
|
Furniture
|
04/01/16
|
|
|
700
|
|
Computer
|
10/02/16
|
|
|
500
|