Prepare a complete year 2006 federal corporate tax return for Acme Corporation.
Balance Sheet 6/30/06 12/31/06
Cash 30,000 80,000
Investments 40,000
Accounts Receivable 48,000
Equipment - Lawnmower 40,000
Accum. Depreciation (8,000)
Total Assets 30,000 200,000
Accounts Payable 52,000
Common Stock 30,000 30,000
Retained Earnings 118,000
Total Liab. And Equity 30,000 200,000
Income Statement
Sales 400,000
Tax exempt interest 20,000
Dividends Received on GM Stock 30,000
Salaries and Wages (180,000)
Depreciation (8,000)
Supplies and materials (50,000)
Meals and Entertainment (54,000)
Charitable contributions (40,000)
Book Income 118,000
Other Information
You are the sole shareholder of Acme Corporation.
Please note that the financial statements have already been issued using the information above and will not be amended.
You formed Acme by contributing $30,000 to the corporation in return for 1 share of stock on 6/30/06. You named yourself to the role of President and every other officer position. Your Acme salary for the year 2006 was $80,000. Running Acme is your full time job.
On 7/1/06, you contributed a lawnmower purchased by you for $10,000 on 1/1/06. It is 5 year property for depreciation purposes. Until July 1, the lawnmower was used only for your lawn. Accordingly, no depreciation was taken on it. The fair market value of the mower was $40,000 on July 1. On the Acme books, straight line depreciation was used. For tax purposes, you will accelerate depreciation by using MACRS depreciation for a 5 year asset.
Acme also received a 2006 K-1 for a partnership it owned during the year. The K-1 showed ordinary income of $8,000 and interest income of $16,000. No partnership income was shown on the financial statements.
Acme owns less than 1% of GM stock outstanding.
Please make up appropriate non-financial information that is not included above (e.g. address, etc.).
IRS forms can be obtained at: Forms and Publications
Extra Credit – To potentially assist in improving one’s grade to a “C” or “D” .
Complete a year 2006 tax return for Acme if an S election was made 6/30/06.
