Master Corporation 1
Master Corporation, an accrual- based calendar year taxpayer had a gross sale of $250000 in 2016. Of those sales, $2000 of goods were returned by their customers for various reasons. Master corporation also agreed to give $500 in credits to customers for goods which were received (but kept by customers) in less than pristine condition.
On August 4, Master Corporation sold a vacant factory to an unrelated party for $3000 which it had purchased on October 15,1990. The factory had an original cost of $1000 and over the years was given $750 in capital improvements. Accumulated depreciation (which was the same for books and tax) in the date of sale was 1,150. Broker and other expenses on the sale amounted to $200. The purchaser agreed to pay Master Corporation $1000 each in 2016, 2017, and 2018.
Required: Complete form 1120 lines 1(a), 1(b) and 1(c) and form 6252.
Master Corporation 2
Master Corporation values closing inventory at cost using FIFO and made no changes in accounting for inventory during 2016. You have calculated that Master Corporation had $6000 of Section 263(a) costs in 2016 and that $800 of these costs belongs in the ending inventory.
On the 2015 tax return, you see that the ending inventory on the balance sheet (Schedule L) was $40000 but on Schedule A (Cost of Goods Sold) it was listed as $ 41200.
Required: Complete Schedule A of Form 1120 plus lines 2 and 3 of Form 1120, page 1.
In addition, Schedule M-1 would reconcile as follows;
Net income per books $225
Add: Expenses recorded on books this year not deducted:
263(A) costs included in December 31,2016 inventory 40
Less: Deductions in this return not charged against book income this year:
263(A) costs included in December 31,2015 inventory (15)
Income per tax return $250
Income per tax return $250
Master Corporation 3
During 2016, the Master Corporation received dividend income of $5000 from a corporation that is 10% owned. In addition, the corporation received a $10000 distribution from Minor Corporation, a non- consolidated subsidiary.
The Master Corporation reported the following interest income for the ended December 31, 2016:
State of New York Bonds $300
U.S. Treasury Notes 500
Certificate of Deposit 180
City of Albany Bonds 100
XYZ Corporation Bonds 350
$1430
The Master Corporation is a limited partner in XYZ partnership. Master Corporation received a Schedule K-1, "Partner's share of income, Credits, Deductions, ETC" for the partnership year ended December 31, 2016.
Requirements:
1. Complete Schedule C, Column (a) and line 4 of form 1120.
2. Complete lines 5 and 10 of Form 1120.