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2022 General Information Page 1 Rose Apothecary, Inc 99-1234567 Forms needed for this return Federal: 1120, 1125-A, 1125-E, Sch G, 4562 Tax Rates Federal Carryovers to 2023 Federal Carryovers Contributions - Current Year Marginal Effective 21% 21% Estimates Federal Estimates 4/18/23 6/15/23 9/15/23 12/15/23 DO NOT FILE Overpayment Balance 0 0. 0 0. 0. 150,000. 150,000. Total $ 150,000. $ 0 150,000. 43,889. Form 1120 Department of the Treasury Internal Revenue Service A Check if: 1a Consolidated return (attach Form 851) . . . b Life/nonlife consoli- dated return. 2 Personal holding co. (attach Sch. PH) 3 Personal service corp. (see instrs).. U.S. Corporation Income Tax Return For calendar year 2022 or tax year beginning TYPE OR PRINT " 2022, ending Go to www.irs.gov/Form1120 for instructions and the latest information. Inc Rose Apothecary, 299 Durham Regional Highway 47 Goodwood, OH 01047 OMB No. 1545-0123 2022 B Employer identification number 99-1234567 C Date incorporated 1/01/2022 D Total assets (see instructions) $ 760,000. 4 Schedule M-3 attached E Check if: (1) ☑Initial return (2) Final return (3) Name change (4) Address change INCOME 4 FOR LIMITATIONS ON DEDUCTIONS DEDUCTIONS SEE INSTRUCTIONS 1 a 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. 5 Dividends and inclusions (Schedule C, line 23) Interest.. 6 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 11 Total income. Add lines 3 through 10. ..... 12 Compensation of officers (see instructions 13 Salaries and wages (less employment credits). 14 Repairs and maintenance. 15 Bad debts 16 Rents 1 a 1 b 1,131,361. 25,000. 1 c 1,106,361. 2 150,000. 3 956,361. 4 10,000. 5 6 7 8 9 - attach statement). 10 11 966,361. - attach Form 1125-E). 12 100,000. 13 70,000. 14 15 17 Taxes and licenses. CI T M от 18 Interest (see instructions). 19 Charitable contributions. T D RE 22 Advertising 23 Pension, profit-sharing, etc., plans 24 Employee benefit programs. 25 Reserved for future use. 26 Other deductions (attach statement) DO NOT FILE 27 Total deductions. Add lines 12 through 26.. 25 See Statement 1 28 Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line 11. . 29 a Net operating loss deduction (see instructions). b Special deductions (Schedule C, line 24). c Add lines 29a and 29b. 30 Taxable income. Subtract line 29c from line 28. See instructions. 29 a 29 b 16 12,000. 17 2,000. 18 19 56,111. 20 Depreciation from Form 4562 not claimed on Form 1125-A or elsewhere on return (attach Form 4562). 20 21 Depletion. 100,000. 21 72222222 28 1,250. 461,361 505,000. 120,000. 5,000. 29 c TAX REFUNDABLE CREDITS AND PUTS 30 5,000. 500,000. 32 Reserved for future use. 31 Total tax (Schedule J, Part I, line 11). 33 Total payments and credits (Schedule J, Part III, line 23) 34 Estimated tax penalty. See instructions. Check if Form 2220 is attached.. 35 Amount owed. If line 33 is smaller than the total of lines 31 and 34, enter amount owed. 36 Overpayment. If line 33 is larger than the total of lines 31 and 34, enter amount overpaid 37 Enter amount from line 36 you want: Credited to 2023 estimated tax 31 105,000. 32 33 105,000. ☐ 34 35 0. 36 Refunded Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. 37 Sign Here Signature of officer Print/Type preparer's name Paid Date Title Preparer's signature Date Non-Paid Preparer May the IRS discuss this return with the preparer shown below? See instructions. ☐ Yes ☐ No Preparer Firm's name PTIN Check if self-employed Firm's EIN Use Only Firm's address BAA For Paperwork Reduction Act Notice, see separate instructions. CPCA0205 10/04/22 Phone no. Form 1120 (2022) Form 1120 (2022) Rose Apothecary, Inc Schedule C Dividends, Inclusions, and Special 1 Deductions (see instructions) Dividends from less-than-20%-owned domestic corporations (other than debt-financed stock). . 2 Dividends from 20%-or-more-owned domestic corporations (other than debt-financed stock). 3 Dividends on certain debt-financed stock of domestic and foreign corporations. 4 Dividends on certain preferred stock of less-than-20%-owned public utilities. . 5 Dividends on certain preferred stock of 20%-or-more-owned public utilities... 6 Dividends from less-than-20%-owned foreign corporations and certain FSCs.. 7 Dividends from 20%-or-more-owned foreign corporations and certain FSCs.. 8 Dividends from wholly owned foreign subsidiaries. 9 Subtotal. Add lines 1 through 8. See instructions for limitations.. 10 Dividends from domestic corporations received by a small business investment company operating under the Small Business Investment Act of 1958. 11 Dividends from affiliated group members. 12 Dividends from certain FSCs. 13 Foreign-source portion of dividends received from a specified 10%-owned foreign corporation (excluding hybrid dividends) (see instructions). 14 Dividends from foreign corporations not included on line 3, 6, 7, 8, 11, 12, or 13 (including any hybrid dividends). 15 Reserved for future use. 99-1234567 (a) Dividends and inclusions (b) Percentage 10,000. 50 65 10,000. See instructions 23.3 26.7 50 Page 2 (c) Special deductions (a) x (b) 5,000. 65 100 See instructions 5,000. DO NOT FILE 16a Subpart F inclusions derived from the sale by a controlled foreign corporation (CFC) of the stock of a lower-tier foreign corporation treated as a dividend (attach Form(s) 5471) (see instructions).. b Subpart F inclusions derived from hybrid dividends of tiered corporations (attach Form(s) 5471) (see instructions).. c Other inclusions from CFCs under subpart F not included on line 16a, 16b, or 17 (attach Form(s) 5471) (see instructions).. 17 Global Intangible Low-Taxed Income (GILTI) (attach Form(s) 5471 and Form 8992). 18 Gross-up for foreign taxes deemed paid.. 19 IC-DISC and former DISC dividends not included on line 1, 2, or 3.. 20 Other dividends. 22 21 Deduction for dividends paid on certain preferred stock of public utilities... 22 Section 250 deduction (attach Form 8993). 23 Total dividends and inclusions. Add column (a), lines 9 through 20. Enter here and on page 1, line 4. 10,000. 24 Total special deductions. Add column (c) lines 9 through 22. Enter here and on page 1, line 29b 100 100 100 100 100 5,000. Form 1120 (2022) CPCA0212 10/04/22 Form 1120 (2022) Rose Apothecary, Inc |Schedule J| Tax Computation and Payment (see instructions) Part I - Tax Computation 99-1234567 Page 3 1 Check if the corporation is a member of a controlled group (attach Schedule O (Form 1120)). See instructions 2 Income tax. See instructions. 2 105,000. 3 Base erosion minimum tax amount (attach Form 8991). 3 4 105,000. 4 Add lines 2 and 3.. 5a Foreign tax credit (attach Form 1118). b Credit from Form 8834 (see instructions). c General business credit (attach Form 3800). d Credit for prior year minimum tax (attach Form 8827) e Bond credits from Form 8912. . . . 6 Total credits. Add lines 5a through 5e. 7 Subtract line 6 from line 4. 8 Personal holding company tax (attach Schedule PH (Form 1120)). 9a Recapture of investment credit (attach Form 4255).. b Recapture of low-income housing credit (attach Form 8611). 5a 5b 5c 5d 5e 6 7 105,000. 8 9a 9b c Interest due under the look-back method (attach Form 8697).. - · completed long-term contracts 9c d Interest due under the look-back method - income forecast method (attach Form 8866).. 9d e Alternative tax on qualifying shipping activities (attach Form 8902). 9e 9f - attach statement) 9g 10 11 105,000. f Interest/tax due under section 453A(c) and/or section 453(1). g Other (see instructions 10 Total. Add lines 9a through 9g.. 11 Total tax. Add lines 7, 8, and 10. Enter here and on page 1, line 31. Part II - Reserved for Future Use 12 Reserved for future use Part III – Payments and Refundable Credits 13 2021 overpayment credited to 2022. 14 2022 estimated tax payments. 15 2022 refund applied for on Form 4466. 16 Combine lines 13, 14, and 15. 17 Tax deposited with Form 7004.. 18 Withholding (see instructions). 19 Total payments. Add lines 16, 17, and 18 20 Refundable credits from: a Form 2439. b Form 4136 c Reserved for future use DO NOT FILE d Other (attach statement ― see instructions) 21 Total credits. Add lines 20a through 20d. 22 Reserved for future use 20 a 20 b 20 c 20 d 23 Total payments and credits. Add lines 19 and 21. Enter here and on page 1, line 33. CPCA0234 10/05/22 12 13 14 105,000. 15 16 105,000. 17 18 19 105,000. 22 བསལ། 105,000. Form 1120 (2022) Form 1120 (2022) Schedule K Rose Apothecary, Inc Other Information (see instructions) 1 Check accounting method: a ☐ Cash b ☑ Accrual 2 See the instructions and enter the: a Business activity code no. 456120 b Business activity Retail Store c Product or service Local Crafts 99-1234567 с ☐ Other (specify) 3 Is the corporation a subsidiary in an affiliated group or a parent-subsidiary controlled group?. If "Yes," enter name and EIN of the parent corporation 4 At the end of the tax year: a Did any foreign or domestic corporation, partnership (including any entity treated as a partnership), trust, or tax-exempt organization own directly 20% or more, or own, directly or indirectly, 50% or more of the total voting power of all classes of the corporation's stock entitled to vote? If "Yes," complete Part I of Schedule G (Form 1120) (attach Schedule G).. b Did any individual or estate own directly 20% or more, or own, directly or indirectly, 50% or more of the total voting power of all classes of the corporation's stock entitled to vote? If "Yes," complete Part II of Schedule G (Form 1120) (attach Schedule G). 5 At the end of the tax year, did the corporation: a Own directly 20% or more, or own, directly or indirectly, 50% or more of the total voting power of all classes of stock entitled to vote of any foreign or domestic corporation not included on Form 851, Affiliations Schedule? For rules of constructive ownership, see instructions... If "Yes," complete (i) through (iv) below. Page 4 Yes No X ☑ X (i) Name of Corporation (ii) Employer Identification Number (if any) (iii) Country of Incorporation If "Yes," complete (i) through (iv) below. b Own directly an interest of 20% or more, or own, directly or indirectly, an interest of 50% or more in any foreign or domestic partnership (including an entity treated as a partnership) or in the beneficial interest of a trust? For rules of constructive ownership, see instructions. (i) Name of Entity DO NOT FILE (ii) Employer Identification Number (if any) (iii) Country of Organization (iv) Percentage Owned in Voting Stock (iv) Maximum Percentage Owned in Profit, Loss, or Capital 6 During this tax year, did the corporation pay dividends (other than stock dividends and distributions in exchange for stock) in excess of the corporation's current and accumulated earnings and profits? See sections 301 and 316.. If "Yes," file Form 5452, Corporate Report of Nondividend Distributions. See the instructions for Form 5452. If this is a consolidated return, answer here for the parent corporation and on Form 851 for each subsidiary. 7 At any time during the tax year, did one foreign person own, directly or indirectly, at least 25% of the total voting power of all classes of the corporation's stock entitled to vote or at least 25% of the total value of all classes of the corporation's stock? For rules of attribution, see section 318. If "Yes," enter: (a) Percentage owned and (b) Owner's country (c) The corporation may have to file Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business. Enter the number of Forms 5472 attached 8 Check this box if the corporation issued publicly offered debt instruments with original issue discount.. If checked, the corporation may have to file Form 8281, Information Return for Publicly Offered Original Issue Discount Instruments. 5,000. 9 Enter the amount of tax-exempt interest received or accrued during the tax year $ 10 Enter the number of shareholders at the end of the tax year (if 100 or fewer) 11 If the corporation has an NOL for the tax year and is electing to forego the carryback period, check here (see instructions). If the corporation is filing a consolidated return, the statement required by Regulations section 1.1502-21(b)(3) must be attached or the election will not be valid. 12 Enter the available NOL carryover from prior tax years (do not reduce it by any deduction reported on page 1, line 29a.) CPCA0234 10/05/22 ☑ None Form 1120 (2022)/n Taxation II - Tax Case #3 Rose Apothecary, Inc Read all this information first before you start the case to get an overview and understanding of the case. - You will be using ProConnect (www.proconnect.intuit.com) to complete this case – like Case #2, but this time you will be completing a Corporation (1120) on your own. You have been provided with the Prior Year Tax Return. In the real world, you will ask a new client for the prior year tax return so you can input the information needed and then update the return with current year information from the trial balance. This is a new client to you, so the prior-year tax return has been provided in BlackBoard. You will use this information, along with the trial balance and information below to complete the tax return. History on the Company: David Rose created the company to sell goods in a retail store. You picked them up as a client this year and they have asked you to prepare their 2023 tax return. Step 1: Review all of the prior-year return. You will be using this information to fill out the general information in ProConnect. Step 2: Log into ProConnect (www.proconnect.intuit.com) Step 3: Click on Tax Returns on the left-hand side and click Create Tax Return on the upper right corner. Step 4: Choose your existing client from the Drop-down menu “Tax - Semester Year - Your Name" and Choose Type 1120 and Tax Year 2023. Change the Tax Return Name to “Case #3 – Rose Apothecary". Step 5: Pull out prior year's return and let's start entering information. - Under client information, enter the information from the top of Form 1120 and Page 4. • Change Prepared by to Non-Paid Preparer - Step 6: Click Preview Forms – does everything match at the top except for initial return? Answer this question in your submission text in Blackboard for 1 point out of your total: Should it be an initial return? Why or why not? If you don't answer this question in your submission, you will lose one point out of your total. Step 7: Let's continue entering information. • Click on Officer Information and enter the officer information from the prior year 1125-E and Schedule G. See if you can find their officer wages for this year based on last year's number on the financials. Step 8: Using the Financial Statements below, start entering the information from the Income Statement and Balance Sheet. Stop and compare periodically to see if it closely resembles last year. Hint: Balance Sheet - Review the asterisk (*) at the top when entering the Balance Sheet Information. Go to Deductions -> Depreciation (NOT direct input) • • Add in the $100,000 asset from the prior year and 100% bonus. Call it Equipment and use date 1/1/2022. Look at Furniture & Fixtures, is there a change from prior year to current year? O If yes, What is the difference? If no, there are no additions. Before you add this as Furniture, you need to check one more thing. Were there any sales of equipment? Do you see a Gain/Loss account on your Financials? If no, the difference is your addition. If yes, ask me for help. Use date 12/31/2023 for the addition. It's 7 year property for furniture and fixtures. Income Statement/Notes - make sure to review the 2022 Carryover information to 2023 and when payments were made on page 1 of the prior year return and enter where appropriate. Also remember how to calculate the difference between Tax Depreciation and Book Depreciation for your M adjustment. Also, don't forget how to calculate retained earnings for your M-2. Step 9: If you have completed everything correctly, your Page 1, line 30 should equal $484,254 and Total Assets/Liab & Capital on the Balance Sheet should equal $902,000. Your overpayment will be credited to 2024, not refunded. Finally, you can print a Complete Return and Upload to Blackboard. Click on File Return -> Print Complete Return and Create the PDF. If you want to use the Book to Tax Worksheet, you are welcome to submit it for any partial credit. REMINDER: ALL PARTS OF ALL CASES MUST BE SUBMITTED TO RECEIVE CREDIT FOR THIS COURSE. IF YOU SUBMIT LATE, YOU GET NO POINTS BUT THE CASE MUST BE SUBMITTED ANYWAY. Balance Sheet - GAAP Basis 2023 2022 December 31, Assets Current Assets Cash Accounts Receivable Less Allowance for Doubtful Accounts Prepaid expenses and other current assets Total Current Assets Property and Equipment Machinery and equipment Furniture and fixtures $ 457,000 $130,000 300,000 250,000 (90,000) (85,000) 25,000 15,000 692,000 310,000 100,000 100,000 50,000 150,000 100,000 Less accumulated depreciation - Equipment Less accumulated depreciation - Furniture Net Property and Equipment Other Assets Deposits Total Other Assets Total Assets Liabilities and Stockholder's Equity Current Liabilities Current portion of long-term debt (40,000) (20,000) 110,000 80,000.00 100,000 370,000 100,000 370,000 $ 902,000 $760,000 50,000 100,000 Accounts payable 40,000 40,000 Accrued payroll 125,000 Other Accrued expenses 63,000 130,000 Total Current Liabilities 153,000 395,000 Long-term Liabilities Long-term debt, net of current portion 450,000 Other Long Term Liabilities 50,000 50,000 Total Long-term Liabilities 500,000 50,000 Total Liabilities Stockholder's Equity Common stock Additional paid-in capital Retained earnings Total Stockholder's Equity Total Liabilities and Stockholder's Equity $ 902,000 $760,000 653,000 445,000 1,000 40,000 1,000 40,000 208,000 274,000 249,000 315,000 Statement of Income - GAAP BASIS Year ended December 31, 2023 2022 Sales Returns and Allowances Net Sales Cost of Sales - Labor Gross Profit Officer's Wages Employee Salaries Bad Debt Expense Rent Expense Ohio Tax Expense Charitable Contributions Depreciation Expense Advertising Expense 1,550,000 75,000 1,131,361 25,000 1,475,000 1,106,361 430,000 150,000 1,045,000 956,361 250,000 100,000 175,000 70,000 5,000 85,000 24,000 12,000 5,000 2,000 100,000 20,000 20,000 25,000 120,000 Other Deductions - Meals 10,000 2,500 Other Deductions - Officer's Life Insurance Expense 4,500 4,500 Operating Income 526,500 440,361 Other Income/(Expense) - Dividend Income 15,000 10,000 Other Income/(Expense) - Municipal Bond Interest Income 7,000 5,000 Other Income/(Expense) - Gain on Sale of Equipment Total Other Income (Expense), net 22,000 15,000 Income Before Federal Income Taxes Federal Income Tax Expense/Payments Net Income 548,500 455,361 150,000 105,000 398,500 350,361 Book to Tax Difference Worksheet Sales Returns and Allowances Net Sales Cost of Sales - Labor Gross Profit Officer's Wages Employee Salaries Bad Debt Expense Rent Expense Ohio Tax Expense Charitable Contributions Depreciation Expense Advertising Expense Other Deductions - Meals Operating Income Other Deductions Officer's Life Insurance Expense Other Income/(Expense) - Dividend Income Other Income/(Expense) - Municipal Bond Interest Income Other Income/(Expense) - Gain on Sale of Equipment Total Other Income (Expense), net Income Before Federal Income Taxes Federal Income Tax Expense/Payments Net Income A 2023 Book Numbers 1,550,000 75,000 1,475,000 430,000 1,045,000 250,000 175,000 B Book to Tax Adjustments Taxable Income A + B = C Book Depreciation Tax Depreciation Difference (Book - Tax) If Book Tax = Unfavorable (+) If Tax Book Favorable (-) Book Gain/(Loss) Tax Gain/(Loss) Difference (Book - Tax) 5,000 24,000 5,000 20,000 25,000 10,000 4,500 526,500 15,000 7,000 22,000 548,500 150,000 398,500 Taxable Income before DRD & NOL