Jim’s Auto Body from 1 year ago

This assignment must be an individual assignment and cannot be a group project.

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.

Additional Information

Jim’s Auto Body (Inc., or LLC)
1122 Sesame Street
New York, NY, 10002
EIN 90-1234567
Dated incorporated January 1st, 2010

Jim Jameson
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.

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