REQUIRED: - Complete Alvin's Music Inc.s (AMI) 2012 Form 1120, Schedule D, and Schedule G (if applicable) using the information provided below. - Neither Form 4562 for depreciation nor Form 4797 for the sale of the equipment is required. Include the amount of tax depreciation and the tax gain on the equipment sale given in the problem (or determined from information given in the problem) on the appropriate lines on the first page of Form 1120. - Assume that AMI does not owe any alternative minimum tax. -If any information is missing, use reasonable assumptions to fill in the gaps. - The forms, schedules, and instructions can be found at the IRS Web site (www.irs.gov). The instructions can be helpful in completing the forms. Show transcribed image text Alvin's Music Inc. (AMI) was formed in 2006 by Alvin Jones and Theona Smith. Alvin and Theona officially incorporated their store on June 12. 2007. AMI sells (retail) all kinds of music-related products including musical instruments, sheet music. CDs, and DVDs. Alvin owns 60 percent of the outstanding common stock of AMI and Theona owns the remaining 40 percent. The following is AMI's audited income statement for 2012: AMIs inventory-related purchases during the year were dollar 1,134,000. AMI values its inventory based on cost using the FIFO inventory cost flow method. Assume the rules of dollar 263A do not apply to AM I. Of the dollar 15,000 interest income, dollar 2.500 was from a City of Fremont bond that was used to fund public activities (Issued in 2012), dollar 3.500 was from a Pleasanton city bond used to fund private activities (Issued in 2011), dollar 3,000 was from a U.S. Treasury bond, and the remaining dollar 6.000 was from a money market account. AMI sold equipment for dollar 10.000. It originally purchased the equipment for dollar 2,000 and. through the date of the sale, had recorded a cumulative total of dollar 4.000 of book depreciation on the asset and a cumulative total of dollar 6.000 of tax depreciation. For tax purposes, the entire gain was recaptured as ordinary income under dollar 1245.