[The following information applies to the questions displayed below.] XYZ is a calendar-year corporation that began...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
[The following information applies to the questions displayed below.] XYZ is a calendar-year corporation that began business on January 1, 2020. For the year, it reported the following information in its current-year audited income statement. Notes with important tax information are provided below. Use Exhibit 16-6. Revenue from sales. Cost of Goods Sold Gross profit Other income: Income from investment in corporate stock Interest income Capital gains (losses) Gain or loss from disposition of fixed assets Miscellaneous income Gross Income XYZ corp. Income statement For current year Compensation Stock option compensation Advertising Repairs and Maintenance Rent Bad Debt expense Depreciation Warranty expenses Charitable donations Meals Goodwill impairment Organizational expenditures Other expenses Total expenses Income before taxes Provision for income taxes Net Income after taxes Expenses: Book Income $ 40,000,000 (27,000,000) $ 13,000,000 300,0001 20,0002 (4,000) 3,0003 50,000 $ 13,369,000 (7,500,000,4 (200,000,5 (1,350,000) (75,000) (22,000) (41,000,6 (1,400,000,7 (70,000,8 (500,000,9 (18,000) (30,000, 10 (44,000,11 (140,000, 12 $(11,390,000) $ 1,979,000 (400,000, 13 $ 1,579,000 1. XYZ owns 30 percent of the outstanding Hobble Corp. (HC) stock. Hobble Corp. reported $1,000,000 of income for the year. XYZ accounted for its investment in HC under the equity method, and it recorded its pro rata share of HC's earnings for the year. HC also distributed a $200,000 dividend to XYZ. 2. Of the $20,000 interest income, $5,000 was from a City of Seattle bond, $7,000 was from a Tacoma City bond, $6,000 was from a fully taxable corporate bond, and the remaining $2,000 was from a money market account. 3. This gain is from equipment that XYZ purchased in February and sold in December (i.e., it does not qualify as §1231 gain). 4. This includes total officer compensation of $2,500,000 (no one officer received more than $1,000,000 compensation). 5. This amount is the portion of incentive stock option compensation that was expensed during the year (recipients are officers). 6.XYZ actually wrote off $27,000 of its accounts receivable as uncollectible. 7. Tax depreciation was $1,900,000. 8. In the current year, XYZ did not make any actual payments on warranties it provided to customers. 9. XYZ made $500,000 of cash contributions to qualified charities during the year. 10. On July 1 of this year XYZ acquired the assets of another business. In the process, it acquired $300,000 of goodwill. At the end of the year, XYZ wrote off $30,000 of the goodwill as impaired. 11. XYZ expensed all of its organizational expenditures for book purposes. XYZ expensed the maximum amount of organizational expenditures allowed for tax purposes. 12. The other expenses do not contain any items with book-tax differences. 13. This is an estimated tax provision (federal tax expense) for the year. Assume that XYZ is not subject to state income taxes. Estimated tax information: XYZ made four equal estimated tax payments totaling $360,000 ($90,000 per quarter). For purposes of estimated tax liabilities, assume XYZ was in existence in 2019 and that in 2019 it reported a tax liability of $500,000. During 2020, XYZ determined its taxable income at the end of each of the four quarters as follows: Quarter-and First Second Third Cumulative taxable income (loss) $ 400,000 $1,100,000 $1,400,000 Finally, assume that XYZ is not a large corporation for purposes of estimated tax calculations. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.) Form 1120 Department of the Treasury Internal Revenue Service A Check it ta Consolidated return (attach Form 851) b Life/nonlife consolidated retum 2 Personal holding co. (attach Sch. PH) 3 Personal service corp. (see instructions) 4 Schedule M-3 attached Income Deductions (See instructions for limitations on deductions.) 1a Gross receipts or sales b Returns and allowances For calendar year 2019 or tax year beginning TYPE OR PRINT E Check if U.S. Corporation Income Tax Return ,2019, ending, Go to www.irs.gov/Form1120 for instructions and the latest information. e Balance. Subtract line 1b from line 18 2 Cost of goods sold (attach Form 1125-A) 3 Gross profit. Subtract line 2 from line to 4 Dividends and inclusions (Schedule C, line 23) s Interest Name XYZ Corporation Number, street, and room or suite no. If a P.O. box, see instructions. 6 Gross rents 7 Gross royalties 8 Capital gain net income (attach Schedule D (Form 1120)) 9 Net gain or (loss) from Form 4797, Part IL, line 17 (attach Form 4797) 10 Other income (see instructions-attach statement) City or town, state or province, country, and ZIP or foreign postal code (1) Initial return (2) Final return 11 Total income. Add lines 3 through 10 12 Compensation of officers (see instructions-attach Form 1125-E) 13 Salaries and wages (less employement credits) 14 Repairs and maintenance 15 Bad debts 16 Rents 17 Taxes and licenses 18 Interest (see instructions) 19 Charitable contributions 22 Advertising 23 Pension, profit-sharing, etc., plans 24 Employee benefit programs 25 Reserved for future use 26 Other deductions (attach statement) 27 Total deductions. Add lines 12 through 26 20 18 1b 20 Depreciation from Form 4562 not claimed on Form 1125-A or elsewhere on retum (attach Form 4562) 21 Depletion (3) Name change 40,000,000 0 OMB No 1545-0123 2019 B Employer identification number C Date incorporated (mm/dd/yy) D Total assets (see instructions) (4) Address change 1c 2 3 4 5 16 7 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 40,000,000 27,000,000 13,000,000 200,000 8,000 3,000 50,000 13,261,000 2,500,000 5,000,000 75,000 27,000 22,000 222,040 1,900,00 1,350,000 166,600 11,262,640 for limitations on deductions.) Tax, Refundable Credits, and Payments Sign Here 22 Advertising 23 Pension, profit-sharing, etc., plans 24 Employee benefit programs 25 Reserved for future use 26 Other deductions (attach statement) 27 Total deductions. Add lines 12 through 26 28 Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line 11 29a Net operating loss deduction (see instructions) 298 29b b Special deductions (Schedule C, line 24) Add lines 298 and 29b 30 Taxable income. Subtract line 29c from line 28. see instructions 31 Total tax (Schedule J, Part I, line 11) 32 2019 net 965 tax liability paid (Schedule J, Part II, line 12) 33 Total payments, credits, and section 965 net tax liability (Schedule J, Part III, line 23) 34 Estimated tax penalty. See instructions. Check if Form 2220 is attached 35 Amount owed. If line 33 is smaller than the total of lines 31, 32, and 34, enter amount owed 36 Overpayment. If line 33 is larger than the total of lines 31, 32, and 34, enter amount overpaid 37 Enter amount from line 36 you want: Credited to 2020 estimated tax Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Refunded May the IRS discuss this retum with the preparer shown below? See instructions. Signature of officer Print Type preparer's name Date Preparer's signature Firm's name Title Date 130,000 Yes Check if self- employed? Firm's EIN I Phone no. 22 23 24 25 26 27 28 290 30 31 32 33 34 35 36 37 Paid Preparer Use Only Firm's address Cat No. 11450Q For Paperwork Reduction Act Notice, see separate instructions. THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. 2020 McGraw-Hill Education. PTIN 1,350,000 166,600 11,262,640 1,998,360 130,000 1,868,360 392,356 No Form 1120 (2019) [The following information applies to the questions displayed below.] XYZ is a calendar-year corporation that began business on January 1, 2020. For the year, it reported the following information in its current-year audited income statement. Notes with important tax information are provided below. Use Exhibit 16-6. Revenue from sales. Cost of Goods Sold Gross profit Other income: Income from investment in corporate stock Interest income Capital gains (losses) Gain or loss from disposition of fixed assets Miscellaneous income Gross Income XYZ corp. Income statement For current year Compensation Stock option compensation Advertising Repairs and Maintenance Rent Bad Debt expense Depreciation Warranty expenses Charitable donations Meals Goodwill impairment Organizational expenditures Other expenses Total expenses Income before taxes Provision for income taxes Net Income after taxes Expenses: Book Income $ 40,000,000 (27,000,000) $ 13,000,000 300,0001 20,0002 (4,000) 3,0003 50,000 $ 13,369,000 (7,500,000,4 (200,000,5 (1,350,000) (75,000) (22,000) (41,000,6 (1,400,000,7 (70,000,8 (500,000,9 (18,000) (30,000, 10 (44,000,11 (140,000, 12 $(11,390,000) $ 1,979,000 (400,000, 13 $ 1,579,000 1. XYZ owns 30 percent of the outstanding Hobble Corp. (HC) stock. Hobble Corp. reported $1,000,000 of income for the year. XYZ accounted for its investment in HC under the equity method, and it recorded its pro rata share of HC's earnings for the year. HC also distributed a $200,000 dividend to XYZ. 2. Of the $20,000 interest income, $5,000 was from a City of Seattle bond, $7,000 was from a Tacoma City bond, $6,000 was from a fully taxable corporate bond, and the remaining $2,000 was from a money market account. 3. This gain is from equipment that XYZ purchased in February and sold in December (i.e., it does not qualify as §1231 gain). 4. This includes total officer compensation of $2,500,000 (no one officer received more than $1,000,000 compensation). 5. This amount is the portion of incentive stock option compensation that was expensed during the year (recipients are officers). 6.XYZ actually wrote off $27,000 of its accounts receivable as uncollectible. 7. Tax depreciation was $1,900,000. 8. In the current year, XYZ did not make any actual payments on warranties it provided to customers. 9. XYZ made $500,000 of cash contributions to qualified charities during the year. 10. On July 1 of this year XYZ acquired the assets of another business. In the process, it acquired $300,000 of goodwill. At the end of the year, XYZ wrote off $30,000 of the goodwill as impaired. 11. XYZ expensed all of its organizational expenditures for book purposes. XYZ expensed the maximum amount of organizational expenditures allowed for tax purposes. 12. The other expenses do not contain any items with book-tax differences. 13. This is an estimated tax provision (federal tax expense) for the year. Assume that XYZ is not subject to state income taxes. Estimated tax information: XYZ made four equal estimated tax payments totaling $360,000 ($90,000 per quarter). For purposes of estimated tax liabilities, assume XYZ was in existence in 2019 and that in 2019 it reported a tax liability of $500,000. During 2020, XYZ determined its taxable income at the end of each of the four quarters as follows: Quarter-and First Second Third Cumulative taxable income (loss) $ 400,000 $1,100,000 $1,400,000 Finally, assume that XYZ is not a large corporation for purposes of estimated tax calculations. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.) Form 1120 Department of the Treasury Internal Revenue Service A Check it ta Consolidated return (attach Form 851) b Life/nonlife consolidated retum 2 Personal holding co. (attach Sch. PH) 3 Personal service corp. (see instructions) 4 Schedule M-3 attached Income Deductions (See instructions for limitations on deductions.) 1a Gross receipts or sales b Returns and allowances For calendar year 2019 or tax year beginning TYPE OR PRINT E Check if U.S. Corporation Income Tax Return ,2019, ending, Go to www.irs.gov/Form1120 for instructions and the latest information. e Balance. Subtract line 1b from line 18 2 Cost of goods sold (attach Form 1125-A) 3 Gross profit. Subtract line 2 from line to 4 Dividends and inclusions (Schedule C, line 23) s Interest Name XYZ Corporation Number, street, and room or suite no. If a P.O. box, see instructions. 6 Gross rents 7 Gross royalties 8 Capital gain net income (attach Schedule D (Form 1120)) 9 Net gain or (loss) from Form 4797, Part IL, line 17 (attach Form 4797) 10 Other income (see instructions-attach statement) City or town, state or province, country, and ZIP or foreign postal code (1) Initial return (2) Final return 11 Total income. Add lines 3 through 10 12 Compensation of officers (see instructions-attach Form 1125-E) 13 Salaries and wages (less employement credits) 14 Repairs and maintenance 15 Bad debts 16 Rents 17 Taxes and licenses 18 Interest (see instructions) 19 Charitable contributions 22 Advertising 23 Pension, profit-sharing, etc., plans 24 Employee benefit programs 25 Reserved for future use 26 Other deductions (attach statement) 27 Total deductions. Add lines 12 through 26 20 18 1b 20 Depreciation from Form 4562 not claimed on Form 1125-A or elsewhere on retum (attach Form 4562) 21 Depletion (3) Name change 40,000,000 0 OMB No 1545-0123 2019 B Employer identification number C Date incorporated (mm/dd/yy) D Total assets (see instructions) (4) Address change 1c 2 3 4 5 16 7 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 40,000,000 27,000,000 13,000,000 200,000 8,000 3,000 50,000 13,261,000 2,500,000 5,000,000 75,000 27,000 22,000 222,040 1,900,00 1,350,000 166,600 11,262,640 for limitations on deductions.) Tax, Refundable Credits, and Payments Sign Here 22 Advertising 23 Pension, profit-sharing, etc., plans 24 Employee benefit programs 25 Reserved for future use 26 Other deductions (attach statement) 27 Total deductions. Add lines 12 through 26 28 Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line 11 29a Net operating loss deduction (see instructions) 298 29b b Special deductions (Schedule C, line 24) Add lines 298 and 29b 30 Taxable income. Subtract line 29c from line 28. see instructions 31 Total tax (Schedule J, Part I, line 11) 32 2019 net 965 tax liability paid (Schedule J, Part II, line 12) 33 Total payments, credits, and section 965 net tax liability (Schedule J, Part III, line 23) 34 Estimated tax penalty. See instructions. Check if Form 2220 is attached 35 Amount owed. If line 33 is smaller than the total of lines 31, 32, and 34, enter amount owed 36 Overpayment. If line 33 is larger than the total of lines 31, 32, and 34, enter amount overpaid 37 Enter amount from line 36 you want: Credited to 2020 estimated tax Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Refunded May the IRS discuss this retum with the preparer shown below? See instructions. Signature of officer Print Type preparer's name Date Preparer's signature Firm's name Title Date 130,000 Yes Check if self- employed? Firm's EIN I Phone no. 22 23 24 25 26 27 28 290 30 31 32 33 34 35 36 37 Paid Preparer Use Only Firm's address Cat No. 11450Q For Paperwork Reduction Act Notice, see separate instructions. THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. 2020 McGraw-Hill Education. PTIN 1,350,000 166,600 11,262,640 1,998,360 130,000 1,868,360 392,356 No Form 1120 (2019)
Expert Answer:
Answer rating: 100% (QA)
Description Book Income Dr Cr Booktax adjustments Taxable Income Dr Cr Dr Cr Revenue from sales 40000000 40000000 Cost of Goods Sold 27000000 27000000 Gross profit 13000000 13000000 Other income Incom... View the full answer
Related Book For
Taxation Of Individuals And Business Entities 2016
ISBN: 9781259334870
7th Edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver
Posted Date:
Students also viewed these general management questions
-
XYZ is a calendar-year corporation that began business on January 1. 2020. For the year, it reported the following intormation in its current-year audited income statement. Notes with important tax...
-
XYZ is a calendar-year corporation that began business on January 1, 2017. For 2017, it reported the following information in its current year audited income statement. Notes with important tax...
-
XYZ is a calendar-year corporation that began business on January 1, 2018. For the year, it reported the following information in its current-year audited income statement. Notes with important tax...
-
IfAUB=AUC and An B=An C, then B = C. Statement-2 AU (BOC) = (AUB) n (AUC)
-
Distinguish between basic and diluted EPS.
-
On March 31, 2012, Mainline Produce Corporation acquired all the outstanding common stock of Iceberg Lettuce Corporation for $34,000,000 in cash. The book values and fair values of Iceberg's assets...
-
The account balances for the year ended December 31,2010, for Williams Industries are listed next: Requirements 1. Prepare Williams Industries multi-step income statement. 2. Prepare Williams...
-
The accounting records of Earthtone Ceramics included the following balances at the end of the period: In the past, Earthtones warranty expense has been 8% of sales. During 2012, the business paid...
-
Calculate total capacitance in picoFarads for a Capacitor that has two plates of 5cm x 5cm separated by a distance of 1mm. The insulated material between the plates is made of Mica which has a = 5.0....
-
The Springfield School Board has made the decision to close one of its middle schools (sixth, seventh, and eighth grades) at the end of this school year and reassign all of next year's middle school...
-
A graphing calculator is recommended. Let y = 6x sin(x). (a) Find an equation of the tangent line to the curve y at the point y =
-
With some understanding of the legal system, the Viral Clean ("Clean") owners can now shift their focus to examining specific areas of law that create potential risks and liabilities for their...
-
1) What is a material handling system? Explain. 2) List and describe the 5 uses of packaging. 3) Advise on some ways that a company can minimize its potential cargo loss. 4) List 5 types of commonly...
-
Wright Corporation purchased 40 percent of the outstanding common stock of Licastro Inc. for $12,000,000 on January 12, 2023. On the date of acquisition, Licastro Inc. reported the following amounts...
-
Explain the school's liability for sexual violence under Title IX and why this is different than criminal liability and explain what an employer must do in order to avoid liability with an...
-
Read the brief case summary below, "Government Contracts and Third-Party Beneficiaries." Kremen also alleged that NSI had breached an implied-in-fact contract with him, but the court dismissed this...
-
Consider a charged parallel-plate capacitor. How can its capacitance be halved? Check all that apply. Double the charge. Double the plate area. Double the plate separation. O Halve the charge. Halve...
-
In the figure, two loudspeakers, separated by a distance of d1 = 2.63 m, are in phase. Assume the amplitudes of the sound from the speakers are approximately the same at the position of a listener,...
-
In 2015, Susan (44 years old) is a highly successful architect and is covered by an employee-sponsored plan. Her husband, Dan (47 years old), however, is a Ph.D. student and is unemployed. Compute...
-
Consider the following letter and answer Shady's question. To my friendly student tax preparer: Hello, my name is Shady Slim. I understand you are going to help me figure out my gross income for the...
-
Carrie D'Lake, Reed A. Green, and Doug A. Divot share a passion for golf and decide to go into the golf club manufacturing business together. On January 2, 2015, D'Lake, Green, and Divot form the...
-
The following table presents prices, in thousands of dollars, of single-family homes for some of the largest metropolitan areas in the United States for the third quarter of 2015 and the third...
-
Following are the closing prices of Google stock for each trading day in May and June of a recent year. a. Find the mean and median price in May. b. Find the mean and median price in June. c. Does...
-
Following are the weights, in pounds, for offensive and defensive linemen on the New York Giants National Football League team at the beginning of a recent year. a. Find the mean and median weight...
Study smarter with the SolutionInn App