Use the following information to complete a 1120 Tax Form 2019 and Schedule D. Razorback Sports Inc.
Question:
Use the following information to complete a 1120 Tax Form 2019 and Schedule D.
Razorback Sports Inc. was formed in 2016 by Austin Williams and Tyler Jacobs.Austin and Tyler officially incorporated their store on March 12, 2016.Razorback Sports sells all kinds of sports-related products including equipment, uniforms and athletic shoes.Austin owns 60% of the outstanding common stock of Razorback Sports and Tyler owns the remaining 40%.
Razorback Sports is located at 123 College Ave, Fayetteville, AR72701.Its employer identification number is 29-5748859 and its business activity code is 451110.Razorback Sports uses the accrual method of accounting and has a calendar year-end.
The officers of Razorback Sports and their Social Security numbers are:
NameTitleSS number
Austin WilliamsCEO/President123-45-6789
Tyler JacobsExecutive VP789-12-3456
Kellie FrancisOperations VP321-54-9876
Jason RobertsSecretary987-65-4321
A trial balance for the corporation is attached.Additional information is presented below.
1.
Razorback Sports has a capital loss carry over from last year of 2,875
2. Interest income:
a.From a City of Fayetteville bond that was used to fund new police station 3,939
b. From a U.S. Treasury bond 6,210
c. From a money market account 7,101
3. Razorback Sports sold equipment.
a. Selling price 10,235
b. Original purchase price 14,145
c. Total book depreciation on the equipment 8,453
d. Total tax depreciation on the equipment 7,705
4.Razorback Sports' dividend income came from Cardinal Inc.Razorback Sports owned 25,000 shares of the stock in Cardinal at the beginning of the year.This represented 15% of the Cardinal outstanding stock.
5.On July 22, 2019 Razorback Sports sold 2,500 shares of its Cardinal Inc. stock.
a.Selling price 41,400
b. Razorback originally purchased these shares on April 24, 2016 27,600
c.After the sale, Razorback Sports owned 12.5% of Cardinal Inc.
6.Interest expense:
a. From the mortgage on Razorback Sports' building
71,300
The business expense limit does not apply to Razorback Sports
7.
Wages to non-officers are 488,750
8.Pension expense is the same for both book and tax purposes.
9.Miscellaneous expenses include parking fines issued by the City of Fayetteville
4,393
10.The corporation uses MACRS depreciation for tax purposes.The corporation purchased all of its equipment on July 1, 2017.Razorback Sports took the maximum amount of 179 depreciation (no bonus depreciation).The equipment is all 7 year property.
a. Cost of the equipment
862,500
11.Accounts receivable written off by Razorback Sports during the year were
17,250
12.On December 1, 2019 Razorback Sports paid a dividend to its shareholders of
93,150
13. Razorback Sports made four equal estimated tax payments of
46,000
a.If it has overpaid its federal tax liability, Razorback would like to receive a refund.
14.
The corporation paid the following compensation to its officers:
Austin Williams
396,750
Tyler Jacobs
327,750
Kellie Francis
166,750
Jason Roberts
149,500
15.All officers devote 100% of their time to the business and all officers are U.S. citizens.
16.Neither Kellie nor Jason owns any stock in Razorback Sports.
Accounting for Governmental and Nonprofit Entities
ISBN: 978-1259917059
18th edition
Authors: Jacqueline L. Reck, James E. Rooks, Suzanne Lowensohn, Daniel Neely