CLC - Entity Tax Return

Tax Return Problem Data Set A, Problem C:11.61, Option 1

You will be working in teams to complete an S corporation tax return and an individual income tax return. The completed tax returns must be submitted as a single document. Refer to the instructions in the Class Resources on how to compress files for upload. Use 2020 forms only (points will be deducted for using 2019 or 2021 forms).

Required

Prepare an S corporation tax return. See data below. You will need the following forms:

1. Form 1120S and corresponding schedules, including Schedule L

1. Schedules M-1 and M-2 are optional. (Points can be earned for a correctly completed Schedule M-1, but grade cannot exceed 100%.)

1. Form 1125-A (use form revised Nov. 2018)

1. Form 1125-E (optional - use form revised Oct. 2019)

1. Schedule D

1. Form 4562 (optional)

1. Form 4797

1. Schedule K-1 for Herman Hiebert (from Problem C11-61)

1. For the Schedule K-1, use the address and SSN information below for Herman.

8. *points can be earned for a correctly completed Schedule M-1, grade cannot exceed 100%

S corporation return assumptions:

1. The tax year end is for 12/31/20 instead of 12/31/19.

1. For the Schedule K-1, the IRS filing center is Center City, ST.

Individual Taxpayer Information

Individual tax forms required:

1. Form 1040

1. Schedule 1

1. Schedule A

1. Schedule B

1. Schedule D

1. Schedule E

1. Form 8949

1. Form 8995

1. Herman Hiebert’s social security number is 456-12-3789. He is married but does not have any dependents. His wife’s name is Rebecca and her social security number is 123-45-6789. They live at 1345 E. 44th Street, City, ST 85017

1. Additional information to complete the tax returns:

1. The Hiebert’s did not engage in any virtual currency transactions during 2020.

1. Rebecca works at Intel Corporation and earned $150,000 during the tax year. Her federal tax withholding was $32,000 and Arizona income taxes withheld were $8,000.

1. Herman is an employee of Bottle Up, Inc., assume he was paid all $120,000 of the officers’ salaries. His federal withholding was $25,000 and his Arizona withholding was $1,500.

1. Mortgage interest on their personal residence was $15,500 and property taxes were $5,150.

1. They have a charitable contributions carryover from prior years of $12,000.

1. The Hiebert’s did not dispose of any investments in a qualified opportunity fund during 2020 (Schedule D).

1. On July 10, 2020 they sold 1,000 shares of Grand Canyon Education (GCE) stock for $80 per share. They purchased the stock on May 1, 2014 for $56 per share.

1. The Taxpayer’s have a long-term capital loss carry forward of $10,000.

1. Assume AMT does not apply.

1. QBI applies. Complete Form 8995, as appropriate.

1. Apply any refund to estimated tax payments for the next year.

1. Instead of preparing Form 4797 for the individual taxpayer (since it was already prepared for the s-corporation), input any gain/loss from the Sec. 1231 asset on Form 1040, Schedule 1, line 4.

1. Download the appropriate tax forms from the IRS website, www.irs.gov. Include any necessary supporting schedules and supporting documentation. Use 2020 tax forms only (points will be deducted for using incorrect forms).

1. If submitting to the dropbox, create one pdf file with all of the tax forms in the order they should appear in a submitted tax return. If submitting paper copy, remember to put the forms in the proper order. Points will be deducted for out-of-order form placement. Remember to include the appropriate taxpayer information on the forms, points will be deducted for missing items.