Prepare the 2015 federal income tax return for Brubeck, Inc. - a C Corporation that manufactures plastic toys. Includes information on stock sales, capital loss, MACRS depreciation, and more.
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TAX RETURN – C CORPORATIONBrubeck, Inc. is a calendar year C corporation that uses the accrual method of accounting.Dave Brubeck owns all the outstanding stock of Brubeck, Inc. The business of the corporation is the manufacturing of plastic toys. Dave is the only officer of the corporation and is paid $110,000 salary per year (included in salaries expense on the trial balance).During the year, Brubeck, Inc. made distributions to Dave with respect to Dave’s stock as follows: $40,000 cash on 3/1/15 and $40,000 cash on 9/1/15. The corporation has sufficient e & p to cover these distributions. During 2013, Brubeck, Inc. incurred a net capital loss. ($1,000) of this net capital loss is left to carry forward to 2015.Total MACRS depreciation for 2015 is $20,000. All depreciable assets were placed in service in previous years.During the current tax year, the corporation made two sales of stock held for investment purposes: Amt. realizedAdj. basisDate acqDate sold70 shares Boeing, Inc. 45,000 43,000 10/30/14 8/24/1510 shares ATT, Inc. 33,000 46,000 1/4/05 6/1/15Assume that the book values of the Boeing and ATT stock are equal to the tax adjusted bases. During the current year, on 6/1/15, the corporation sold a building used in its manufacturing business. The selling price of the building was $50,000. It originally cost $42,000 in 2008 and Brubeck, Inc. has correctly deducted $7,000 of tax depreciation on it. Assume that the book valueof the building is equal to the tax adjusted basis.All of the corporation’s current year dividend income was received from the Boeing and ATT stock. In both cases, less than 1 percent of the outstanding stock is owned by Brubeck, Inc.Cost of sales consists of the following:Beginning inventory 100,000Purchases 295,000Ending Inventory - 120,000 275,000Brubeck, Inc. paid federal estimated income taxes of $22,000 for the tax year.Assume Brubeck does not qualify for any Sec. 199 qualified domestic production deduction.Financial statement information for Brubeck, Inc. is provided below.
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