Question

On May 1, 1989, Brendan McLeod and Duncan Ryan formed Angler Corporation to sell fishing tackle. Pertinent information regarding Angler is summarized as follows:   

• The business address is 3027 Woodland Ridge Blvd., Baton Rouge, Louisiana 70816.
• The employer identification number is 75-3392543; the principal business activity code is 451110.
• Brendan and Duncan each own one-half of the outstanding common stock; no other class of stock is authorized. Brendan is president of the company, and Duncan is secretary-treasurer. Both are full-time employees of the corporation, and each receives a salary of $160,000. Brendan’s Social Security number is 145-26-2593. Duncan’s Social Security number is 287-43-4945.
• The corporation uses the accrual method of accounting and reports on a calendar basis. Inventories are determined by using the lower of cost or market method. For book purposes, the straight-line method of depreciation is used.
• MACRS depreciation was $71,620 for the year.
• During 2019, the corporation distributed a cash dividend of $88,000.

Selected portions of Angler’s profit and loss statement of 2019 reflect the following debits and credits:

Account		Debit	Credit
Gross sales			$2,537,800
Sales returns and allowances		$93,670
Cost of goods sold		1,007,900
Dividends   received from stock    investments in less than 20%    owned U.S. corporations			120,500
Interest income
State bonds		$18,300
Certificates of deposit		15,000	33,300
Premiums on term life insurance policies on the lives of Brendan and Duncan; Angler Corporation is the designated beneficiary		17,200
Salaries-officers		320,000
Salaries-clerical and sales		261,000
Taxes (state, local, and payroll)		39,140
Repairs		19,450
Interest expense		16,030
Fines for dumping toxic waste		8,210
Advertising		6,480
Rental Expense		27,930
Depreciation		47,000

A comparative balance sheet for Angler Corporation reveals the following information:

Assets	December 31, 2018	December 31, 2019
Cash	$480,000	$541,288
Trade notes and accounts receivable	808,200	1,060,600
Inventories	600,000	736,000
Certificates of Deposit	130,000	130,000
State bonds	170,000	170,000
Prepaid Federal tax	---	3,400
Buildings and other depreciable assets	240,000	278,000
Accumulated depreciation	(88,800)	(135,800)
Land	20,000	20,000
Other assets	3,600	1,000
Total assets	$2,363,000	$2,804,488

Liabilities and Equity
Accounts payable	$340,000	$159,000
Other current liabilities	57,860	67,000
Mortgages	220,000	251,000
Capital stock	500,000	500,000
Retained earnings	1,245,140	1,827,488
Total liabilities and equity	$2,363,000	$2,804,488

Net income per books (before any income tax accrual)          $827,590

Income Tax Expense                                                               157,242

Net Income                                                                              $670,348

During 2019, Angler Corporation made estimated tax payments of $160,642 to the IRS. Prepare a Form 1120 for Angler Corporation for tax year 2019. Include Forms 1125-A, 1125-E and Schedule G (Form 1120).

Answer 1

Angler Corporation - EIN 75-3392543

3027 Woodland Ridge Blvd

Baton Rouge, LA 70816.

Tax Year - 2019

Form 1120

1.a. Gross Receipts $2,537,800

b. Returns and allowances (93,670)

----------------- 2,444,130

2. Cost of Goods Sold 1,007,900

----------------

3. Gross Profit 1,436,230

4. Dividends and inclusions 120,500

5. Interest 33,300

11. Total Income 1,590,030

----------------

12. Compensation of Officers 320,000

13. Salaries and wages 261,000

14. Repairs and maintenance 19,450

16. Rents 27,930

17. Taxes and Licenses 39,140

18. Interest Expenses 49,330

20. Depreciation 47,000

22. Advertising   6,480

27. Other Deductions

a. Fines 8,210

b. Insurance 17,200

-------------

Taxable Income before special deduction 794,290

Less: Special deduction (Dividend @50%)    60,250

--------------------

30. Taxable Income 734,040

31. Total Tax @21% 154,148

33. Total Payments 160,642

Refund / Overpayment 6,494

Form 1120 - Page 2

Schedule C - Dividends, Inclusions, and Special Deductions

1. Dividends from less than 20% owned domestic corporations $120,500 - 50% - 60,250

Special deduction $60,250

Form 1120 - Page 3

Schedule J - Tax

Income Tax $154,148

Part II - Payments

2019 Tax Payments $160,642

Page 6 - Schedule L - Balance Sheet per Books

Assets Beginning of tax year End of tax year

Cash 480,000 541,288

Accounts Receivable 808,200 1,060,600

Inventories 600,000 736,000

Other Current Assets 300,000 303,400

Buildings 240,000 278,0000

Less: Acc. Dep 88,800 151,200 135,800 142,200

Land 20,000 20,000

Other Assets 3,600 1,000

----------------- --------------------

Total Assets 2,363,000 2,804,488

Liabilities and Shareholder's Equity

Accounts Payable 340,000 159,000

Other Current Liabilities 57,860 67,000

Mortgage 220,000   251,000

Capital stock 500,000 500,000

Reatined Earnings 1245,140 1885,282

---------------- -----------------

Total Liabilities and Shareholder's

Equity 2,363,000 2,862,282

  Form 1125A

Inventory at beginning 600,000

Purchases 1,143,900

--------------

1,743,900

Inventory at the end 736,000

-----------------

COGS 1,007,900

------------------

Form 1125-E

Name of the officer    SS number percentage of stock Amount of Compensation 1. Brenden McLeod 145-26-2593 50% $160.0000

2. Duncan Ryan 287-43-4945 50% $160,0000

Schedule G

Name of the individual Identifying number Country of Citizenship Percentage Owned

1. Brenden McLeod 145-26-2593 United States 50%

2. Duncan Ryan 287-43-4945 United States 50%