Tax II
Corporate Tax Return
Fall 2009
Due date: September 8 (Outreach September 15)
Spring distance due date Feb 5 – please do not send earlier than Feb 4
Complete Form 1120 for Angler Corporation tax return problem #1 on page 2-51 of the
text book. Install and use the TaxCut Business software on the CD packaged with the
book. UPDATE the software when you load it. You do not need to do any further
updates.
Send the return by e-mail attachment to the Graduate Assistant who works with me,
Katherine King - kzk0007@auburn.edu. Go into “file,” “print,” and select PDF. Then
you will be able to save the file as a PDF file. Send the PDF file.
The software will interview you, or you may select “whole form” and use the forms
directly. It is a good idea to go through the interview process at the beginning for
business name, etc. When it is time to enter numbers, I recommend “whole form” and
then using “jump to linked field” as you go through the line items that have a link
available.
Additional information:
1. I used “sales” for business activity and “fishing tackle” for product and business
code 451120 (for sales of hobby-type items).
2. Assume the owners are U.S. citizens. When you enter information about the time
devoted to the business, put 100%, which indicates full-time. Make up addresses
as needed.
3. Dividends are not in excess of accumulated earnings and profits.
4. For Cost of Goods Sold, see the Balance Sheets for beginning and ending
inventory and plug an amount for purchases that will provide the correct CGS.
IRC Section 263A does not apply, and there have been no changes in accounting
method for inventory.
5. Override to enter depreciation = 40,000. This override should be the only one that
you use. Overrides are normally a bad idea, but using this one keeps things much
simpler for the tax return.
6. The software will work backwards to solve for Schedule M-1 Lines 1 and 2.
Check these amounts against the amounts in the book. If the amounts are
incorrect, something is wrong on the Schedule M-1 or on page 1. I recommend
you do not enter ending RE on the Balance Sheet. Let the software calculate it
and then check that it is correct. (You need to enter the dividends on Schedule M2; then ending RE should be correct.)
7. You need to do a final error check. Informational errors and the depreciation
override are fine.