Corporate Tax Return Project

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

• For purposes of this project only, do not attachother forms as required by certain lines of Form1120.

Taxpayer Information:

Champion, Inc. is an accrual-basis, calendar-year corporationthat operates five local “sportsmerchandise-stores”.  

Champion was incorporated on February28th, 2017

Champion’s main office is located at2346 Lake Shore Drive, Chicago, IL 60606

Champion’s employer identificationnumber is 31-0923874.

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

• Champion’s receipts for book purposes are as follows:
  • Champion’s gross receipts for the year totaled $1,700,000,which included returns and allowances of $123,000. Total GrossReceipts 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 BMOHarris certificates of deposit.
  • Champion received dividend income of $4,000 from DisneyCorporation.  Champion owns less than 5% of Disneystock.
  • In December 2018, Champion received $13,500 from a company thatwill lease excess space in Champion’s largest store from January 1through October 31, 2019.
• Champion’s expenses for book purposes are as follows:
  • Cost of GoodsSold                                                                     $710,000
  • Salaries (including Officers’ Compensation of$123,000)                     230,000
  • Federal incometax                                                                         22,375
  • Depreciation                                                                                180,000
  • State & LocalTaxes                                                                        92,300
  • InterestExpense                                                                              3,800
  • Repairs                                                                                         11,500
  • Rent                                                                                             36,750
  • Advertising                                                                                   20,000
  • Contribution to Gov. Rauner’s re-electioncampaign                               8,750
  • Property/Casualty InsurancePremiums                                               14,000
  • BusinessMeals                                                                                6,250
  • BusinessEntertainment                                                                     3,500
  • Hotel and airfare forbusiness                                                             3,250
  • Premiums paid to key employee life insurancepolicy                        8,950
  • Charitable contributionspaid                                                           78,750
• Champion’s 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.  Theshares had been purchased on 12/13/17 for $1,500.
• For its first tax year, Champion generated a $21,000 netoperating loss.
• Champion made the following estimated income tax payments tothe IRS for 2018:
  • Overpayment in 2017, credited to2018                                         $1,550
  • 2^ndquarter, 3^rdquarter,4^thquarter                                         $2,700each

• Champion does not qualify for any other tax credits in2018.
• Any overpayment of 2018 tax should be credited to its 2019estimated taxes.