Tax Return $1–$ Spring $2024$

Complete the $2023$ Form $1120$ for Jones Ranch. Jones Ranch is organized as a C corporation. The ranch operation was originally incorporated by Willard Jones on July $1,1993.$  Upon Willard$’$s death in $1999,$ his sons Orville and Howard inherited equal shares. Orville handles most of the business decisions and Howard supervises the ranch hands. Each are devoted full time to the corporation.

Much of the land is used to graze cattle, while some of the tillable land is rented to a neighboring farmer. The ranch also has active oil wells from which the corporation receives royalty payments.

Address: PO Box $87,$ Paint Creek, Texas $79521$

EIN: $20-0000000$

Owners:

Orville Jones SSN: $111-11-111$

PO Box $88,$ Paint Creek, Texas $79521$

Howard Jones SSN: $222-22-2222$

PO Box $89,$ Paint Creek, Texas $79521$

Due to a drought in $2022,$ the ranch suffered a net operating loss. A $$43,000$ NOL is available for the $2023$ filing.

The corporation uses the accrual method of accounting on a tax basis. All required $1099$s were filed by January $31,2024.$  FIFO at lower of cost or market is used to value inventory.

Forms needed:

$1120$

Schedule G $($Form $1120)$

Form $1125-$A

Form $1125-$E

Comparative Balance Sheets $-$ Tax Basis

$20222023$

Cash $1,200700$ 

Inventory $67,80075,900$ 

Prepaid insurance $4,0004,400$ 

Buildings $120,000120,000$ 

Accumulated depreciation $(96,000)(102,000)$

Equipment $400,000400,000$ 

Accumulated depreciation $(390,000)(396,000)$

Land $100,000100,000$ 

Total Assets $207,000203,000$

Accounts payable $700200$

Current portion of long$-$term debt $10,00010,000$

Accrued payroll taxes $300400$

Shareholder loan $50,00049,000$

Note payable$-$bank $140,000133,000$

Common stock $1,0001,000$

Retained earnings $5,0009,400$

$207,000203,000$

Income Statement $-$ Tax Basis @ $12/31/23$ 

Cattle sold $200,000$ 

Cost of cattle sold $72,000$ 

Net $128,000$ 

Farm land rent $60,000$ 

Oil royalties $100,000$ 

Federal government ag payments $2,000$ 

Total $290,000$ 

Gross pay Orville $60,000$ 

Gross pay Howard $50,000$ 

Gross pay ranch hands $90,000$ 

Payroll taxes $21,300$ 

Property taxes $6,300$ 

Interest $8,000$ 

Depreciation $12,000$ 

Employee benefits $5,000$ 

Repairs & maintenance $4,000$ 

Fuel $8,000$ 

Feed $12,000$ 

Utilities $2,500$ 

Telephone $500$ 

Insurance $6,000$ 

Total expenses $285,600$ 

Net Income $4,400$