C:3-66 TAX FORM/RETURN PREPARATION PROBLEMS Melodic Musical Sales, Inc. is located at 5500 Fourth Avenue, City, ST 98765. The corporation uses the calendar year and accrual basis for both book and tax purposes. It is engaged in the sale of musical instruments with an employer identification number (EIN) of XX-2021019. The company incorporated on December 31, 2015, and began business on January 2, 2016. Table C:3-3 contains balance sheet information at January 1, 2019, and December 31, 2019. Table C:3-4 presents an unaudited GAAP income state- ment for 2019. These schedules are presented on a book basis. Other information follows the tables. TABLE C:3-3 Melodic Musical Sales, Inc.-Book Balance Sheet Information January 1, 2019 Debit Credit December 31, 2019 Credit Account Debit Cash Accounts receivable Allowance for doubtful accounts Inventory Investment in corporate stock Investment in municipal bonds Cash surrender value of insurance policy Land Buildings Accumulated depreciation—Buildings Equipment Accumulated depreciation Equipment Trucks Accumulated depreciation Trucks Accounts payable Notes payable (short-term) Accrued payroll taxes Accrued state income taxes Accrued federal income taxes Bonds payable (long-term) Net deferred tax liability Capital stock-Common Retained earnings-Unappropriated Totals $ 516,774 $ 815,494 400,000 500,000 $ 20,000 $ 25,000 2,500,000 3,500,000 260,000 50,000 30,000 30,000 60,000 80,000 200,000 200,000 2,000,000 2,000,000 100,000 140,000 750,000 1,100,000 187,500 205,000 100,000 100,000 30,000 50,000 300,000 270,000 800,000 640,000 14,880 18,600 4,500 7,500 2,500 77,361 1,800,000 600,000 57,394 167,593 1,500,000 1,500,000 2,000,000 4,674,440 $6,816,774 $6,816,774 $8,375,494 $8,375,494 Pearson's Federal Taxation... Shop Now < Problem The Corporate Income Tax Corporations 3-61 TABLE 6:3-4 Melodis Musical Sales Inc-Book Income Statement 2019 Go to Problem $10,000.00 250,000 ?? ? ? 0.rs Net sales Enginning word Purchases 39,750,000 Corp... Discussion Questions $2.500.000 5.500.000 3.500C | 4,500,000 Corp... Issue Identification Questions Cost of goods sold Co Ce Corp... Problems Ieper Gorden Het pre-im-oices feineusne GC comation Other songs $152.500 201300 95 COD 30.000 550 002 400 COD 72.000 48.000 90 COD 11 62 COD 210.000 45.000 Corp... Comprehensive Problem Tax Strategy and Critical Corp... Thinking Problems Tax Form/return Corp. Preparation Problems Potras ng Legal and account ng fees Charitable croche Parolta I-beesters Bad debt aparea Totaleceses Ganense of IARIO Netgin on socks < 11,023,3001 105,000 5220 45,000 12,20 33.992,000 > Corp... Case Study Problems Neticore bitare income twee rebeline Stane income tax Netice 175,000 $22/4,411 Corp.... Tax Research Problems Estrate! Tax Payme Form 2220): The corporation deposited estimated tax payments as follow April 15, 2019 S 35.000 June 15, 2019 190000 September 13, 2019 165.000 December 15, 2019 165,000 Tal 5.5.5.5.2000 Tasalle come in 2018 was $1.2 million, and the 2018 tax was $252.000. The per tion earned its 2019 taxable income creely throughout the year. Therefore, it does not use the annualizacion or seasonal methods. Asume the moderpayment penalty cate remains at 55. Ir the card queries of 2020 regardless of any rate clue. Inni.ry and Calw Gowl Sun Form 125-A.. The corporation uses the periodic inventory method and prices its incenery sing the war af HPO COSE or kel. Only Leginning inventory, widing sleitory, and purchases should be selected on Pocm 1125 A. Noche cost expenses de located to cost of goods sold. Note 4ume the creation is rumpe from the itcm capitalizarion UNICAP) niles Corp... Corp-3-60 -* Corp-3-61 Aa Pearson's Federal Taxation... Shop Now < Problem 3-62 Corporations Chapter 3 Go to Problem Corp... Discussion Questions Line 911 Check Chic & idi Nopicable Nc Camisation of Form 1125-F 16. 1 Mary Travis XXX-XX-XXXX 100% 50% $290,000 John Willis XXX-XX-XXXX 19% 0.000 Cars Parket XXX-XX XXXX 100% 25% Tocal $650,000 Rad Dwa For LN PAS, the carries the dirt writen metodo deduce liddehis. Tor book purposes, the corporationes an allowance for doubcful accounts. During 2019, the corporation charged 540,003 to the allowance account, sich amount represent cal wrio for 2019. Corp... Issue Identification Questions Corp... Problems Corp... Comprehensive Problem Tax Strategy and Critical Corp... Thinking Problems Tax Form/return Corp. Preparation Problems < Corp... Case Study Problems Corp.... Tax Research Problems Additional unusta Schedule 1b ????????? Till in the correct amount 22 +51140 10 3 b Retail sales 11 Du nutek lux Mainstruments 12 Not applicabile 5 No 1.8-14 12-14 15 a No Yes; mit Schedule G .. 1: Do not halex No 16-23 21 No 6-2 No Yo $ Do not check box Organitowl rondines. Terporation incurred less than 55,000 cernizational expenditex in the varit tegen lansiness. Fur bank purpces, the time the entire pencitur. For sex purposes, the corporation elected under Sec. 248 to deduct the entire amount of ex penditures in the year it began business. Teerefore, bo amortization expendicares appear in the tax return circok liancial statements for rent per (is fates on Tror The coxportion sold 100 shares of PDQ Corp.com.ou stack on October 8, 2015, foc 5145,000. The curporation acquired the cock on December 14, 2018, for 599,000 The Experation als we shares of JSR Camp common cuckom Juna 1R, 2019, her $110,000. The corporation acqaed stock on September 18, 2017, for $120,000. The corporation has $15,000 capitales carryover from 2018. These transactions were not pred to the reparation Form 1099-R. Pixca Assais deprecat For book pur coe: The corporalice una sagalite decat over the useful lives of sees as follows store building 50 years; quipem, ten years, and crocks, five years The corporation des a hall-year's deguistion in the year of acquisition and the year of de coction ad assumes no salvage value. The book fulancial statements in Tables C-3 and C 3-4 reflect these cakeulations Ferrtax pares: All MACRS ruperiyle son building 59 garments dencial real property; capel, vel year property and trucks five year property. The corporation and the storm buikting for 2 million and placed it in Service on January 1, 2016. The currentinuind tres o quipment tur $250,000 Faquipment ! and $300,000 Louipment and placed them in service on lacuary 2, 2016. The corpore cion acquired the tracks for S100.000 and placed them in service on July 18, 2017. The tricks are not liceul property and are not just to the limitation on luxury autcoils. Corp... Corp-3-61 Corp-3-61 Aa The Corporate Income Tax Corporations 3-63 The corporation did not make the expensing election under Sec. 179 or take bonus deprecia- tion on any property acquired before 2019. Accumulated tax depreciation through Decem- ber 31, 2018, on these properties is as follows: Store building Equipment 1 Equipment 2 Trucks $ 151,780 140,675 281,350 52,000 On October 16, 2019, the corporation sold for $280,000 Equipment 1 that originally cost $250,000 on January 2, 2016. The corporation had no Sec. 1231 losses from prior years. In a separate transaction on October 17, 2019, the corporation acquired and placed in service a piece of equipment costing $600,000. Assume these two transactions do not qualify as a like-kind exchange. The new equipment is seven-year property. The corpora- tion made the Sec. 179 expensing election with regard to the new equipment for the entire cost of this property. Where applicable, use published IRS depreciation tables to compute 2019 depreciation (reproduced in Appendix C of this text). Other Information: Ignore the accumulated earnings tax. • The corporation received dividends (see Income Statement in Table C:3-4) from tax- able, domestic corporations, the stock of which Melodic Musical Sales, Inc. owns less than 20%. • The corporation paid $100,000 in cash dividends to its shareholders during the year and charged the payment directly to retained earnings. • The state income tax in Table C:3-4 is the exact amount of such taxes incurred during the year. The corporation is not entitled any credits. • Ignore the financial statement impact of any underpayment penalties incurred on the tax return. Required: Prepare the 2022corporate tax return for Melodic Musical Sales, Inc. along with any necessary supporting schedules.