Assignment: Statement Returns
Complete the following for this assignment:
• Prepare a 1120 U.S. Corporation Income Tax Return as Jim's Auto Body, Inc.
• Complete the appropriate schedules in the 1120 and Statement 1 - Other Deductions.
• Prepare a 1065 U.S. Return of Partnership as Jim's Auto Body, LLC.
• Complete the appropriate schedules in the 1065, Statement 1 - Other Deductions and the 1065 Schedule K1 for Jim.
Note: This project is to be completed without the use of tax preparation software. Use of tax preparation software is considered cheating.
Additional Information
Jim's Auto Body (Inc., or LLC)
1122 Sesame Street
New York, NY, 10002
EIN 90-1234567
Dated incorporated January 1st, 2010
Jim Jameson
8701 Electric Avenue
New York, NY, 10002SSN: 123-45-6789
• Jim Jameson took on Fred as a partner for the LLC. Fred owns 50% of all profits, losses, and capital. You do not have to complete Part 2 K, L, or M on the 1065 Schedule K1 (there is not enough information provided).
• $4,500 salary expense is officer's compensation for the corporation and guaranteed payment to partners for the LLC.
• $55,000 equipment is 7-year property in its 5th year of service and was placed into service in the middle of the year, thus using the half-year convention. Use the correct table from the IRS-Publication 946: How to Depreciate Property-to determine the tax deductible depreciation. Form 4562 is not required.
• Jim made four quarterly estimated tax payments of $800 each over the course of the year.
• In accordance with IRS instructions: "Corporations with total receipts and total assets at the end of the tax year less than $250,000 are not required to complete Schedules L, M-1, and M-2" (Internal Revenue Service, n.d.). This also applies to the LLC.
• For the 1065 Schedule K1, you will not have enough information to fill out Part 2 K, L, and M.
Jim's Auto Body Revenues: Service Revenue 28,000
Total Revenue 28,000
Expenses:Salary Expense 4,500
Rent Expense 1,200
Utility Expense 300
Depreciation Expense 500
Insurance Expense 100
Supply Expense 400 7,000
Net Income 21,000
Jim's Auto Body Balance Sheet As of April 30, 2015
AssetsCash 101,800
Acct Rec'able 20,000PP In 1,100
Equipment 55,000Accu. Dep. 500
Supplies 2,600
Total Assets 180,000
Liabilities and Stockholders' Equity Liabilities :Accounts Payable 8,000
Salary Payable 3,000
Total Liabilities 11000.00
Stockholders' Equity:Common Stock 150,000 Retained Earnings 19000
Total Stockholders' Equity 169000.00
Total Liabilities and Stockholders' Equity 180,000
Reference
Internal Revenue Service. (2015). Instructions for form 1120.