Preparation of tax returns and related schedules can be very helpful in terms of integrating and applying tax concepts. To that end, please prepare the appropriate tax forms and schedules for the problem below You may use the software provided with your textbook or prepare the forms by hand. Instructions for all forms and schedules may be obtained from the IRS website. A hard copy of your solution with schedules and forms in proper attachment order (stapled or clipped) is to be submitted in class. Check figure: Taxable Income (line 30) = $1,430,250. On November 17, 2001. Autumn Leigh and Aaron Johns formed Sportico, Inc. to sell sporting goods. Pertinent information regarding Sportico, Inc. is summarized as follows: Sportico Inc.'s business address is 2120 Rebecca Lane. Great Falls, Montana 59401; its telephone number is (575) 541-1122, and its email address is Sportico @Sportico.com. The employer identification number is 11-1111111, and the principal business activity code is 451110. Autumn is president of the company, and Aaron is vice president. Aaron and Autumn are full-time employees of Sportico, Inc. Autumn's Social Security number is 123-45-6789, and Aaron's Social Security number is 987-65-4321. Sportico, Inc. is an accrual method, calendar year taxpayer. Inventories are determined using FIFO and the lower of cost or market method. Sportico, Inc. uses the straight-line method of depreciation for book purposes and accelerated depreciation (MACRS) for tax purposes. . Sportico, Inc.'s income statement for 2018 is shown on page 2. Sportico, Inc.'s balance sheet is as follows: January 1, 2018 1,200,000 2,062,500 2,750,000 1,125,000 375,000 400,000 Cash Accounts receivable Inventories Stock investment State of Montana bonds Certificates of Deposit Prepaid federal tax Buildings and other depreciable assets Accumulated depreciation Land Other assets Total assets Accounts payable Other current liabilities Mortgages Capital stock Retained Earnings Total liabilities and equity 4,805,000 (727.000) 812,500 140,000 12,943,000 2,284,000 175,000 4,625,000 2,500,000 3,359,000 12,943,000 December 31, 2018 1,750,243 2,247,000 3,030,000 1.075.000 375,000 400,000 3,977 5,305,000 (1,602,000) 812,500 178,500 13,575,220 1,975,000 155,000 4,575,000 2,500,000 4,370,220 13,575,220 The following additional information is found in the tax working papers: Dividends were from Heath Corporation, a less-than-20%-owned domestic corporation. Other income includes key officer life insurance proceeds of $200,000. The capital gain resulted from the sale of Bulldog Enterprises stock. Sportico. Inc. purchased the Bulldog Enterprises stock on 3/2/2011 for $24,000. The loss due to worthlessness of stock was due to the bankruptcy of CLL, Inc. The stock was purchased March 5, 2009. Purchases (for COGS) were $3,380,000. Retained earnings are unappropriated. All contributions were paid in cash during the current year to Great Falls University. State income taxes for 2018 were $3,000 (included in the state, local, and payroll tax expense). Actual bad debts for the year were $5,500. The actual warranty outlay for the year was $7,250. For tax purposes, depreciation amounted to $950,000. Sportico, Inc. declared a $345,000 cash dividend during the current year. . During 2018, Sportico, Inc. made estimated tax payments of $80,000 each quarter to the IRS. Salaries and wages includes $200,000 paid to Mr. Johns and Ms. Leigh ($100.000 each). 1120 Form Income Deductions (See instructions for limitations on deductions.) u custome U.S. Corporation Income Tax Return OMB No. 1545-0123 For calendar year 2018 or tax year beginning ........... 2018, ending ..........20 . 2018 Department of the Treasury Internal Revenue Service Go to www.irs.gov/Form1 120 for instructions and the latest information. A Check it: B Employer identification number 1a Consolidated return Cattach Form 851) TYPE b Lifeonlife consoli- Number, street, and room or suite no. If a P.O. box, see instructions. C Date incorporated OR dated return . . 2 Personal holding co. PRINT (attach Sch. PH . City or town, state or province, country, and ZIP or foreign postal code D Total assets (see instructions) 3 Personal service corp. (see instructions). 4 Schedule M-3 attached E Check it: (1) Initial return (2) Final return (3) Name change (4) Address change 1a Gross receipts or sales . . . . . . . . . . . . . . . . b Returns and allowances . . . . . . . . . . . . . . . C Balance. Subtract line 1b from line 1a 2 Cost of goods sold (attach Form 1125-A).... 3 Gross profit. Subtract line 2 from line 1c . . . Dividends and inclusions (Schedule C, line 23, column (a)). 5 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gross rents . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Gross royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Capital gain net income (attach Schedule D (Form 1120)). . . . . . . . . . . . . . . 9 Net gain or (loss) from Form 4797, Part II, line 17 (attach Form 4797) . . . . . . . . . . . 10 Other income (see instructions-attach statement) . . . . . . . . . . . . . . . . . 11 Total income. Add lines 3 through 10 . . . . . . . . . 12 Compensation of officers (see instructions-attach Form 1125-E) . . . . . . . . . . 13 Salaries and wages (less employment credits) . . . Repairs and maintenance . . . . . . . . . . . . . . . . . . . . Bad debts . . . . . . . . . . . . . . Rents . . . . . . . . . . . . . . . . . . . . . . . . Taxes and licenses . . . . . . . . . Interest (see instructions) ... .... Charitable contributions. . . . . Depreciation from Form 4562 not claimed on Form 1125-A or elsewhere on return (attach Form 4562) Depletion . . . . . . . . Advertising . . . . . . . . . . . Pension, profit-sharing, etc., plans . ... Employee benefit programs . . . . . . . . Reserved for future use. . . . . . . . . Other deductions (attach statement). ... .. 26 Total deductions. Add lines 12 through 26. .... Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line 11. 28 29a Net operating loss deduction (see instructions) ........ 29a b Special deductions (Schedule C, line 24, column (c) ... ... 29b C Add lines 29a and 29b . . . . . 29c Taxable income. Subtract line 29c from line 28. See instructions 31 Total tax (Schedule J, Part I, line 11). . . . . . . . . . . . . . . . . . . . . 31 2018 net 965 tax liability paid (Schedule J, Part II, line 12). Total payments, credits, and section 965 net tax liability (Schedule J, Part III, line 23) . Estimated tax penalty. See instructions. Check if Form 2220 is attached . . . . . . U 34 Amount owed. If line 33 is smaller than the total of lines 31, 32, and 34, enter amount owed . .. 35 Overpayment. If line 33 is larger than the total of lines 31, 32, and 34, enter amount overpaid. . . . 36 Enter amount from line 36 you want: Credited to 2019 estimated tax Refunded 37 Under penalties of perjury, I declare that I have examined this return, including companying schedules and statements, and to the best of my knowledge and belief, it is true, correct, Sign and complete. Declaration of preparer other than taxpayer) is based on all information of which preparer has any knowledge. May the IRS discuss this return with the preparer shown below? Here See instructions. Yes No Signature of officer Print/Type preparer's name Preparer's signature PTIN Paid Check self-employed Preparer Firm's EIN Use Only Firm's name Firm's address Phone no. For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 114500 Form 1120 (2018) & XSNN 27 Tax Refundable Credits, and Payments . . Date Preparation of tax returns and related schedules can be very helpful in terms of integrating and applying tax concepts. To that end, please prepare the appropriate tax forms and schedules for the problem below You may use the software provided with your textbook or prepare the forms by hand. Instructions for all forms and schedules may be obtained from the IRS website. A hard copy of your solution with schedules and forms in proper attachment order (stapled or clipped) is to be submitted in class. Check figure: Taxable Income (line 30) = $1,430,250. On November 17, 2001. Autumn Leigh and Aaron Johns formed Sportico, Inc. to sell sporting goods. Pertinent information regarding Sportico, Inc. is summarized as follows: Sportico Inc.'s business address is 2120 Rebecca Lane. Great Falls, Montana 59401; its telephone number is (575) 541-1122, and its email address is Sportico @Sportico.com. The employer identification number is 11-1111111, and the principal business activity code is 451110. Autumn is president of the company, and Aaron is vice president. Aaron and Autumn are full-time employees of Sportico, Inc. Autumn's Social Security number is 123-45-6789, and Aaron's Social Security number is 987-65-4321. Sportico, Inc. is an accrual method, calendar year taxpayer. Inventories are determined using FIFO and the lower of cost or market method. Sportico, Inc. uses the straight-line method of depreciation for book purposes and accelerated depreciation (MACRS) for tax purposes. . Sportico, Inc.'s income statement for 2018 is shown on page 2. Sportico, Inc.'s balance sheet is as follows: January 1, 2018 1,200,000 2,062,500 2,750,000 1,125,000 375,000 400,000 Cash Accounts receivable Inventories Stock investment State of Montana bonds Certificates of Deposit Prepaid federal tax Buildings and other depreciable assets Accumulated depreciation Land Other assets Total assets Accounts payable Other current liabilities Mortgages Capital stock Retained Earnings Total liabilities and equity 4,805,000 (727.000) 812,500 140,000 12,943,000 2,284,000 175,000 4,625,000 2,500,000 3,359,000 12,943,000 December 31, 2018 1,750,243 2,247,000 3,030,000 1.075.000 375,000 400,000 3,977 5,305,000 (1,602,000) 812,500 178,500 13,575,220 1,975,000 155,000 4,575,000 2,500,000 4,370,220 13,575,220 The following additional information is found in the tax working papers: Dividends were from Heath Corporation, a less-than-20%-owned domestic corporation. Other income includes key officer life insurance proceeds of $200,000. The capital gain resulted from the sale of Bulldog Enterprises stock. Sportico. Inc. purchased the Bulldog Enterprises stock on 3/2/2011 for $24,000. The loss due to worthlessness of stock was due to the bankruptcy of CLL, Inc. The stock was purchased March 5, 2009. Purchases (for COGS) were $3,380,000. Retained earnings are unappropriated. All contributions were paid in cash during the current year to Great Falls University. State income taxes for 2018 were $3,000 (included in the state, local, and payroll tax expense). Actual bad debts for the year were $5,500. The actual warranty outlay for the year was $7,250. For tax purposes, depreciation amounted to $950,000. Sportico, Inc. declared a $345,000 cash dividend during the current year. . During 2018, Sportico, Inc. made estimated tax payments of $80,000 each quarter to the IRS. Salaries and wages includes $200,000 paid to Mr. Johns and Ms. Leigh ($100.000 each). 1120 Form Income Deductions (See instructions for limitations on deductions.) u custome U.S. Corporation Income Tax Return OMB No. 1545-0123 For calendar year 2018 or tax year beginning ........... 2018, ending ..........20 . 2018 Department of the Treasury Internal Revenue Service Go to www.irs.gov/Form1 120 for instructions and the latest information. A Check it: B Employer identification number 1a Consolidated return Cattach Form 851) TYPE b Lifeonlife consoli- Number, street, and room or suite no. If a P.O. box, see instructions. C Date incorporated OR dated return . . 2 Personal holding co. PRINT (attach Sch. PH . City or town, state or province, country, and ZIP or foreign postal code D Total assets (see instructions) 3 Personal service corp. (see instructions). 4 Schedule M-3 attached E Check it: (1) Initial return (2) Final return (3) Name change (4) Address change 1a Gross receipts or sales . . . . . . . . . . . . . . . . b Returns and allowances . . . . . . . . . . . . . . . C Balance. Subtract line 1b from line 1a 2 Cost of goods sold (attach Form 1125-A).... 3 Gross profit. Subtract line 2 from line 1c . . . Dividends and inclusions (Schedule C, line 23, column (a)). 5 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Gross rents . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Gross royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Capital gain net income (attach Schedule D (Form 1120)). . . . . . . . . . . . . . . 9 Net gain or (loss) from Form 4797, Part II, line 17 (attach Form 4797) . . . . . . . . . . . 10 Other income (see instructions-attach statement) . . . . . . . . . . . . . . . . . 11 Total income. Add lines 3 through 10 . . . . . . . . . 12 Compensation of officers (see instructions-attach Form 1125-E) . . . . . . . . . . 13 Salaries and wages (less employment credits) . . . Repairs and maintenance . . . . . . . . . . . . . . . . . . . . Bad debts . . . . . . . . . . . . . . Rents . . . . . . . . . . . . . . . . . . . . . . . . Taxes and licenses . . . . . . . . . Interest (see instructions) ... .... Charitable contributions. . . . . Depreciation from Form 4562 not claimed on Form 1125-A or elsewhere on return (attach Form 4562) Depletion . . . . . . . . Advertising . . . . . . . . . . . Pension, profit-sharing, etc., plans . ... Employee benefit programs . . . . . . . . Reserved for future use. . . . . . . . . Other deductions (attach statement). ... .. 26 Total deductions. Add lines 12 through 26. .... Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line 11. 28 29a Net operating loss deduction (see instructions) ........ 29a b Special deductions (Schedule C, line 24, column (c) ... ... 29b C Add lines 29a and 29b . . . . . 29c Taxable income. Subtract line 29c from line 28. See instructions 31 Total tax (Schedule J, Part I, line 11). . . . . . . . . . . . . . . . . . . . . 31 2018 net 965 tax liability paid (Schedule J, Part II, line 12). Total payments, credits, and section 965 net tax liability (Schedule J, Part III, line 23) . Estimated tax penalty. See instructions. Check if Form 2220 is attached . . . . . . U 34 Amount owed. If line 33 is smaller than the total of lines 31, 32, and 34, enter amount owed . .. 35 Overpayment. If line 33 is larger than the total of lines 31, 32, and 34, enter amount overpaid. . . . 36 Enter amount from line 36 you want: Credited to 2019 estimated tax Refunded 37 Under penalties of perjury, I declare that I have examined this return, including companying schedules and statements, and to the best of my knowledge and belief, it is true, correct, Sign and complete. Declaration of preparer other than taxpayer) is based on all information of which preparer has any knowledge. May the IRS discuss this return with the preparer shown below? Here See instructions. Yes No Signature of officer Print/Type preparer's name Preparer's signature PTIN Paid Check self-employed Preparer Firm's EIN Use Only Firm's name Firm's address Phone no. For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 114500 Form 1120 (2018) & XSNN 27 Tax Refundable Credits, and Payments . . Date