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Corporate Tax Return Project

Complete Form 1120 pages 1 and 2, Schedule D, Form 8949 and complete Schedule M-1 on page 5 of a 2018 Form 1120 for the following taxpayer using the information that follows:

• For purposes of this project only, do not attach other forms as required by certain lines of Form 1120.

Taxpayer Information:

Champion, Inc. is an accrual-basis, calendar-year corporation that operates five local sports merchandise-stores.

Champion was incorporated on February 28th, 2017

Champions main office is located at 2346 Lake Shore Drive, Chicago, IL 60606

Champions employer identification number is 31-0923874.

Champion has total assets as of December 31, 2018 of $3,540,000

• Champions receipts for book purposes are as follows:
  • Champions gross receipts for the year totaled $1,700,000, which included returns and allowances of $123,000. Total Gross Receipts totaled $1,577,000.
  • Champion received $16,200 of interest income during the year, with $5,120 from City of DeKalb bonds and the balance from BMO Harris certificates of deposit.
  • Champion received dividend income of $4,000 from Disney Corporation. Champion owns less than 5% of Disney stock.
  • In December 2018, Champion received $13,500 from a company that will lease excess space in Champions largest store from January 1 through October 31, 2019.
• Champions expenses for book purposes are as follows:
  • Cost of Goods Sold $710,000
  • Salaries (including Officers Compensation of $123,000) 230,000
  • Federal income tax 22,375
  • Depreciation 180,000
  • State & Local Taxes 92,300
  • Interest Expense 3,800
  • Repairs 11,500
  • Rent 36,750
  • Advertising 20,000
  • Contribution to Gov. Rauners re-election campaign 8,750
  • Property/Casualty Insurance Premiums 14,000
  • Business Meals 6,250
  • Business Entertainment 3,500
  • Hotel and airfare for business 3,250
  • Premiums paid to key employee life insurance policy 8,950
  • Charitable contributions paid 78,750
• Champions total cost recovery for tax purposes was $132,500.
• Champion has a net capital loss carryforward from 2017 of $8,000
• Champion sold IBM stock on 7/4/18 for $4,100. The shares had been purchased on 12/13/17 for $1,500.
• For its first tax year, Champion generated a $21,000 net operating loss.
• Champion made the following estimated income tax payments to the IRS for 2018:
  • Overpayment in 2017, credited to 2018 $1,550
  • 2^ndquarter, 3^rdquarter, 4^thquarter $2,700 each

• Champion does not qualify for any other tax credits in 2018.
• Any overpayment of 2018 tax should be credited to its 2019 estimated taxes.

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