Complete the following for this assignment:
- Prepare a 1120 U.S. Corporation Income Tax Return as Jim’s Auto Body, Inc.
- Complete the appropriate schedules in the 1120 and Statement 1 – Other Deductions.
- Prepare a 1065 U.S. Return of Partnership as Jim’s Auto Body, LLC.
- Complete the appropriate schedules in the 1065, Statement 1 – Other Deductions and the 1065 Schedule K1 for Jim.
Note: This project is to be completed without the use of tax preparation software. Use of tax preparation software is considered cheating and is grounds for a failing grade.
Jim’s Auto Body (Inc., or LLC)
1122 Sesame Street
New York, NY, 10002
Dated incorporated January 1st, 2010
8701 Electric Avenue
New York, NY, 10002SSN: 123-45-6789
- Jim Jameson took on Fred as a partner for the LLC. Fred owns 50% of all profits, losses, and capital. You do not have to complete Part 2 K, L, or M on the 1065 Schedule K1 (there is not enough information provided).
- $4,500 salary expense is officer’s compensation for the corporation and guaranteed payment to partners for the LLC.
- $55,000 equipment is 7-year property in its 5th year of service and was placed into service in the middle of the year, thus using the half-year convention. Use the correct table from the IRS—Publication 946: How to Depreciate Property—to determine the tax deductible depreciation. Form 4562 is not required.
- Jim made four quarterly estimated tax payments of $800 each over the course of the year.
- In accordance with IRS instructions: “Corporations with total receipts and total assets at the end of the tax year less than $250,000 are not required to complete Schedules L, M-1, and M-2” (Internal Revenue Service, n.d.). This also applies to the LLC.
- For the 1065 Schedule K1, you will not have enough information to fill out Part 2 K, L, and M.
Jim’s Auto Body Revenues: Service Revenue
Jim’s Auto Body
As of April 30, 2015
Acct Rec’able 20,000PP In
Equipment 55,000Accu. Dep.
Liabilities and Stockholders’ Equity Liabilities :Accounts Payable
Stockholders’ Equity:Common Stock 150,000 Retained Earnings
Total Stockholders’ Equity
Total Liabilities and Stockholders’ Equity
Internal Revenue Service. (2015). Instructions for form 1120. Retrieved from https://www.irs.gov/pub/irs-pdf/i1120.pdf