For this assignment, you will complete two tax returns (Corporation Return and Partnership Return), for 175 points each. You may use the tax software found at http://accountants.intuit.com/tax/proseries/ 

Please note there is a limit of 5 returns per session.

PART I – Tax Return #1, Corporate ReturnBackground

Jane Collier, James Taye, and Steve Allwine each own one-third of the common stock of Tasty Treats and Beverages. The corporation was incorporated on April 3, 2004. It has only one class of stock outstanding and operates as a C corporation for tax purposes. Tasty Treats and Beverages caters kid-friendly social events.

  • Located at 1215 Blue Horizon, Dallas, TX 12234.
  • Employer Identification Number is 12-34567890.
  • Business activity is catering food. Its business activity code is 722300.
  • The shareholders also work as officers for the corporation as follows:
    • Jane is the chief executive officer and president (Social Security number 242-62-5786).
    • James is the executive vice president and chief operating officer (Social Security number 563-58-8923).
    • Steve is the vice president of finance (Social Security number 575-58-1572).
  • All officers devote 100% of their time to the business
  • All officers are U.S. citizens.
  • Use the accrual method of accounting and have a calendar year-end.
  • Four equal estimated tax payments of $28,000 each quarter. Its tax liability last year was $85,000.
  • If it has overpaid its federal tax liability, the corporation would like to receive a refund.
  • Dividend paid of $20,000 to its shareholders on October 1. The Corporation had ample earnings and profits (E&P) to absorb the distribution.

Financial Statements

Additional Information 

  • Inventory-related purchases during 2013 were $175,000. It values its inventory based on cost using the FIFO inventory cost flow method. Assume the rules of §263A do not apply.
  • Of the $12,000 interest income, $1,500 was from a City of Dees bond that was used to fund public activities (issued in 2011), $1,750 was from an Border city bond used to fund private activities (issued in 2004), $2,500 was from a U.S. Treasury bond, and the remaining $6,250 was from a money market account.
  • Dividend income came from ABC Inc. Owned 10,000 shares of the stock in ABC Inc. at the beginning of the year. This represented 10 percent of outstanding stock.
  • On September 1, 2013, the corporation sold 1,000 shares of its ABC stock for $15,000. It had originally purchased these shares on June 13, 2006, for $7,500. After the sale, the Corporation owned 9 percent of ABC.
  • compensation is as follows:
    • Jane $175,000
    • James $150,000
    • Steve $150,000
    • Other $275,000
  • The Corporation wrote off $10,000 in accounts receivable as uncollectible during the year.
  • Regular tax depreciation was $28,000. None of the depreciation should be claimed on Form 1125A.
  • The $7,300 interest expense was from a business loan.
  • Other expenses include $3,000 for premiums paid on term life insurance policies for which Tasty Treats and Beverages, Inc. is the beneficiary. The policies cover the lives of Jane, James, and Steve.

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