Question: Project Choice for Options #1 and #2 Read the case or option on which yourPortfolio Projectis based and determine all items that will be included
Project Choice for Options #1 and #2
Read the case or option on which yourPortfolio Projectis based and determine all items that will be included and excluded from gross income on the Form 1040 or the Form 1120 based on the TCJA of 2018.
In an Excel spreadsheet, list all included and excluded items in column A. In column B, explain why the item is either included or excluded.
You may reference the specific tax law, the text (make sure you include the page number), or a link to another trusted source.A trusted source is either supported by the IRS or academic literature (including textbooks) under which tax law for the year 2018 is applicable.
This assignment should be delivered using the Excel spreadsheet that lists the excluded items and the supporting information on which your decision is based. Review the Portfolio Project Grading Rubric on the Course Information page to understand how you will be graded on the project.
Note: All forms referenced in this assignment can be accessed throughPROCONNECT(Links to an external site.)
or by visitinghttps://www.irs.gov/forms-pubs-search(Links to an external site.)
Option #2:Form 112, Schedule L, M-1, and M-2
Apex Corporation was incorporated on January 1, 2017.Here is the income statement for Apex Corp. for 2018.Please complete the Form 1120 usingProConnectTax Online.
Revenue from sales
40,000,000
Cost of goods sold
27,000,000
Gross profit
13,000,000
Other income
Income from investment in corporate stock
300,000
Interest income
20,000
Capital gains (losses)
-4000
Gain or loss from disposition of fixed assets
3,000
Miscellaneous income
50,000
Gross income
13,369,000
Expenses
Compensation
7,500,000
Stock option compensation
200,000
Advertising
1,350,000
Repairs and maintenance
75,000
Rent
22,000
Bad debt expense
41,000
Depreciation
1,400,000
Warranty expenses
70,000
Charitable donations
500,000
Meals
18,000
Goodwill impairment
30,000
Organizational expenditures
44,000
Other expenses
140,000
Total expenses
11,390,000
Income before taxes
1,979,000
Provision for income taxes
720,000
Net income before taxes
1,259,000
APEX Corporation Balance Sheet
December 31, 2018 (in $)
Assets
Current Assets
Cash
580,000
Investment in Bonds
Accounts Receivable
470,000
Less Allowance for bad debts
-
Accounts Receivable (net)
470,000
Inventory
300,000
Total Current Assets
1,350,000
Non Current Assets
Fixed Assets
21,170,000
Less Accum. Depreciation
-
Fixed Assets (net)
21,170,000
Life Insurance
Investments in stocks
10,050,000
Goodwill
120,000
Total Noncurrent Assets
31,340,000
Total Assets
32,690,000
Liabilities and Shareholders' Equity
Current Liabilities
Accounts Payable
370,000
Reserve for Warranties
800,000
Total Current Liabilities
1,170,000
Non Current Liabilities
Long -term debt
19,000,000
Deferred compensation
-
Deferred tax Liabilities
-
Total Non Current Liabilities
19,000,000
Total Liabilities
20,170,000
Shareholders' Equity
Common Stack ( $1 par value)
5,000,000
Additional Paid In Capital
7,520,000
retained earnings
-
Total Shareholders' Equity
12,520,000
Total Liabilities and Shareholders' Equity
32,690,000
Here are some other data:
- The total compensation of officers is $2,500,000; other wages and salaries is $5,000,000.
- Apex actually wrote off $27,000 of its accounts receivable as uncollectible.
- Charitable contributions, $500,000, were all cash contributions.
- Tax depreciation was $1,900,000.
- Apex wrote off $30,000 of goodwill as impaired.
- Apex's dividends received deduction is $130,000
- Apex made $480,000 in estimated tax payments.
- Apex's taxable interest income is $8,000.
- Apex's other deductions are 166,600.
For your final Portfolio Project, submit Form 1120, page 1-5, Schedule L, M-1, and M-2.
Explain how you prepared and the purpose of each schedule used in your preparation of Form 1120.
Among the other Schedules that corporations also use, there are Schedules B, D, G, H, M-3, and N, O and PH among several others. Explain why in this corporate return, some or all of these other schedules were not used or required.
Please use thePROCONNECTOnline Tax Preparation Software.Submit your portfolio as PDF or as embedded PDF forms in a Word document. You may also convert all your PDF forms into Word documents and submit the whole portfolio as a single Word document.
You will be working on some of these forms throughout the course in the Portfolio Project Milestones and getting incremental feedback from your course instructor. Use this feedback to make improvements or corrections before you submit your final forms.
Note: All forms referenced in this assignment can be accessed throughPROCONNECT(Links to an external site.)
or by visitinghttps://www.irs.gov/forms-pubs-search(Links to an external site.)
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