Reference no: EM131155060

Prepare consolidated corporate tax return based on a list of operating facts and there are 5 subs (small post close trial balances).

The Flying Gator Corporation and its subsidiaries, T1, T2, T3, T4, and T5 Corporations have filed consolidated tax returns for a number of years. All corporations use the hybrid method of accounting. During the current year, they report the operating results as listed in the table below. Note the following additional information:

Income/ Deductions	Flying Gator	T1	T2	T3	T4	T5	Total
Gross Receipts	5,600,000	1,400,000	1,500,000	1,900,000	900,000	1,600,000	12,900,000
Cost of Goods Sold	(1,500,000)	(700,000)	(400,000)	(350,000)	(105,000)	(203,000)
Gross Profit	4,100,000	700,000	1,100,000	1,550,000	795,000	1,397,000	9,642,000
Dividends	100,000	50,000	40,000	45,000	63,000	33,000
Interest	15,000					12,000
Sec. 1231 gain			15,000	21,000	15,000
Sec 1245 gain		25,000		5,000		12,000
Long-term Capital Gain/(Loss)	(5,000)	6,000	(4,000)	2,000	(5,000)	7,000
Short-term Capital Gain/(Loss)		(3,000)	2,000	(3,000)	(7,000)	(8,000)
Total Income	4,210,000	778,000	1,153,000	1,620,000	861,000	1,453,000	10,075,000
Salaries and Wages	175,000	160,000	305,000	185,000	45,000	506,000
Repairs	305,000	45,000	30,000	56,000	18,000	56,000
Bad debts	103,000	31,000	37,000	14,000	63,000	12,000
Taxes	60,000	27,000	28,000	12,000	30,000	17,000
Interest	30,000	20,000	15,000	11,000	16,000	32,000
Charitable Contributions	35,000	56,000	12,000	16,000	11,000	23,000
Depreciation (other than that included in cost of goods sold)	92,000	20,000	35,000	9,000	28,000	13,000
Other Expenses	563,000	248,000	178,000	149,000	250,000	236,000
Total Deductions	1,363,000	607,000	640,000	452,000	461,000	895,000
Separate Taxable Income	2,847,000	171,000	513,000	1,168,000	400,000	558,000	5,657,000

Flying Gator, T1, T2, T3, T4, and T5 are the only members of their controlled group.

Flying Gator's address is 2101 W. University Ave, Gainesburg, FL 32611. Its Employer ID No. is 38-2345678. Flying Gator was incorporated on June 11, 1986. Its total assets are $380,000. Flying Gator made estimated tax payments of $160,000 for the affiliated group in the current year. Stephen Marks is Flying Gator's president. Flying Gator operates in the Advertising Industry.

No NOL or other carryovers from preceding years are available

Flying Gator uses the last in, first out (LIFO) inventory method. T1 commenced selling inventory to Flying Gator in the preceding year which resulted in the $40,000 year end deferred intercompany profit. An additional LIFO inventory layer was created by T1's sales to Flying Gator during the current year that remained unsold at year end. The intercompany profit on the additional inventory is $30,000. None of the original LIFO layer was sold during the current year.

T2 commenced selling inventory to Flying Gator in the preceding year which resulted in the $60,000 year end deferred intercompany profit.

T3 commenced selling inventory to Flying Gator in the preceding year which resulted in the $45,000 year end deferred intercompany profit. An LIFO inventory layer was created by T3's sales which remained unsold, and resulted in intercompany profit of $25,000 on the additional inventory.

In the current year, T1 paid Flying Gator a $20,000 dividend. T2 paid Flying Gator a $30,000 dividend. T3 paid Flying Gator a $10,000 dividend. T4 paid Flying Gator a $15,000 dividend. T5 paid Flying Gator a $25,000 dividend.

All of Flying Gator's dividends are received from T1, T2, T3, T4, and T5. T1's dividends are received from a 15% owned domestic corporation. T2's dividends are received from a 30% owned domestic corporation. T3's dividends are received from a 25% owned domestic corporation. T4's dividends are received from a 45% owned domestic corporation. T5's dividends are received from a 70% owned domestic corporation. All distributions are from E&P.

Flying Gator's interest income is received from T1. The interest is paid on March 31 of the current year on a loan that was outstanding from October 1 of the preceding year through March 31 of the current year. No interest income was accrued at the end of the preceding tax year.

Officer salaries are $80,000 for Flying Gator. They are $65,000 for T1, $50,000 for T2, $95,000 for T3, $45,000 for T4, and $60,000 for T5.

Flying Gator's capital losses include a $10,000 long term loss on a sale of land to T1 in the current year. They also include a $5,000 gain on a sale of equipment to T2 in the current year, and a $15,000 loss on a sale of building to T3 in the current year. There is also a $5,000 gain on sale of land to T4 and $10,000 gain on sale of equipment to T5.

There are no non-recaptured net Sec. 1231 losses from prior tax years

T1's Sec. 1245 gains include $20,000 recognized on the sale of equipment to Flying Gator in the current year. The asset cost $100,000 and had been depreciated for two years by T1 as a five year property under MACRS rules. One-half year of depreciation was claimed by T1 in the current (second) year. Flying Gator commences depreciating the property in the current year by using the MACRS rules and a five year recovery period. Flying Gator claimed one-half year's depreciation on the property in the current year

T3's Sec 1245 gains include $5,000 recognized on the sale of equipment to Flying Gator in the current year. The asset cost $45,000 and had been depreciated for three years by T3 as a five year property under MACRS rules. Flying Gator commences depreciating the property in the current (third) year by using the MACRS rules and a five year recovery period. Flying Gator claimed one year of depreciation on the property in the current year.

T5's Sec. 1245 gains include $10,000 recognized on the sale of equipment to Flying Gator in the current year. The asset cost $55,000 and had been depreciated for four years by T5 as a five year property under MACRS rules. Flying Gator commences depreciating the property in the current year by using the MACRS rules and a five year recovery period. One-half year of depreciation was claimed by T5 in the current (fourth) year. Flying Gator claimed one-half year's depreciation on the property in the current year

T1 Corporation's Tax ID is 230948345. The Corporation's address is 1500 E. Concord St, Orlando FL 32803. The corporation operates in the Healthcare Industry

T2 Corporation's Tax ID is 847285496. The address is 45001 24th Street Rd, Miami, FL 33142. The corporation operates in the Accounting Industry.

T3 Corporation's Tax ID is 475483054. The address is 898 5th St, St. Petersburg, FL 33701. The corporation operates in the Real Estate Industry.

T4 Corporation's Tax ID is 235385924. The address is 3400 Bay Center Dr, Tampa, FL 33609. The corporation operates in the Cosmetics Industry

T5 Corporation's Tax ID is 475284534. The address is 234 Fort Lauderdale Beach Blvd, Fort Lauderdale, FL 33304.The corporation operates in the Retail Industry

FLYING GATOR CORPORATION:-

FLYING GATOR CORPORATION
POST CLOSE TRIAL BALANCE
Assets
Current assets
Cash		$      45,000
Accounts receivables		8,000
Office supplies		10,000
Prepaid rent		17,000
Total current assets				$      80,000
Non-Current assets
Equipment	51,000
Less: Accumulated depreciation-Equipment	18,000	33,000
Total non-current assets				33,000
Total assets				$    113,000
Liabilities and Stockholders' Equity
Liabilities
Accounts payable	24,000
Utilities payable	14,000
Unearned revenue	4,000
Interest payable	2,500
Notes payable	5,500
Total liabilities				50,000
Stockholders' equity
Common stock ($1 par)	55,000
Retained earnings		8,000
Total stockholders' equity				63,000
Total liabilities and stockholders' equity				$    113,000

	T1	T2	T3	T4	T5
Flying Gator (percentage of ownership)	80%	95%	88%	90%	84%

T1 CORPORATION:-

T1 CORPORATION
POST CLOSE TRIAL BALANCE
Assets
Current assets
Cash		$       11,000
Accounts receivables		13,000
Office supplies		2,500
Prepaid rent		16,000
Total current assets				$       42,500
Non-Current assets
Equipment	100,000
Less: Accumulated depreciation-Equipment	42,000	58,000
Total non-current assets				58,000
Total assets				$     100,500
Liabilities and Stockholders' Equity
Liabilities
Accounts payable	21,000
Utilities payable	3,000
Interest payable	6,500
Notes payable	2,300
Total liabilities				32,800
Stockholders' equity
Common stock ($1 par)	62,000
Retained earnings		5,700
Total stockholders' equity				67,700
Total liabilities and stockholders' equity				$     100,500

T2 CORPORATION:-

T2 CORPORATION
POST CLOSE TRIAL BALANCE
Assets
Current assets
Cash		$       32,000
Accounts receivables		18,000
Office supplies		6,700
Total current assets				$       56,700
Non-Current assets
Equipment	60,000
Less: Accumulated depreciation-Equipment	23,000	37,000
Total non-current assets				37,000
Total assets				$       93,700
Liabilities and Stockholders' Equity
Liabilities
Accounts payable	17,000
Utilities payable	6,000
Unearned revenue	6,000
Interest payable	2,000
Notes payable	3,200
Total liabilities				34,200
Stockholders' equity
Common stock ($1 par)	50,000
Retained earnings		9,500
Total stockholders' equity				59,500
Total liabilities and stockholders' equity				$       93,700

T3 CORPORATION:-

T3 CORPORATION
POST CLOSE TRIAL BALANCE
Assets
Current assets
Cash		$       84,000
Accounts receivables		25,000
Office supplies		2,300
Total current assets				$     111,300
Non-Current assets
Equipment	45,000
Less: Accumulated depreciation-Equipment	12,000	33,000
Total non-current assets				33,000
Total assets				$     144,300
Liabilities and Stockholders' Equity
Liabilities
Accounts payable	38,000
Utilities payable	4,600
Unearned revenue	16,300
Interest payable	5,300
Notes payable	4,500
Total liabilities				68,700
Stockholders' equity
Common stock ($1 par)	55,000
Retained earnings		20,600
Total stockholders' equity				75,600
Total liabilities and stockholders' equity				$     144,300

T4 CORPORATION:-

T4 CORPORATION
POST CLOSE TRIAL BALANCE
Assets
Current assets
Cash		$       26,000
Accounts receivables		12,300
Office supplies		2,800
Total current assets				$       41,100
Non-Current assets
Equipment	32,000
Less: Accumulated depreciation-Equipment	6,200	25,800
Total non-current assets				25,800
Total assets				$       66,900
Liabilities and Stockholders' Equity
Liabilities
Accounts payable	12,000
Utilities payable	4,880
Unearned revenue	4,500
Interest payable	3,000
Notes payable	2,100
Total liabilities				26,480
Stockholders' equity
Common stock ($1 par)	34,000
Retained earnings		6,420
Total stockholders' equity				40,420
Total liabilities and stockholders' equity				$       66,900

T5 CORPORATION:-

T5 CORPORATION
POST CLOSE TRIAL BALANCE
Assets
Current assets
Cash		$       81,500
Accounts receivables		45,000
Office supplies		3,900
Total current assets				$     130,400
Non-Current assets
Equipment	60,000
Less: Accumulated depreciation-Equipment	35,000	25,000
Total non-current assets				25,000
Total assets				$     155,400
Liabilities and Stockholders' Equity
Liabilities
Accounts payable	32,000
Utilities payable	10,400
Unearned revenue	1,980
Interest payable	1,320
Notes payable	15,700
Total liabilities				61,400
Stockholders' equity
Common stock ($1 par)	69,000
Retained earnings	.	25,000
Total stockholders' equity				94,000
Total liabilities and stockholders' equity				$     155,400