Acc307

7109 Words Jan 27th, 2014 29 Pages
S O LU T I O N TO C O R P O R AT I O N P R AC T I C E S E T
No More Ice, Inc.

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No More Ice, Inc. E. I. No. 98-7654321 A Schedule Attached to and Made Part of 2012 Form 1120—U.S. Corporation Income Tax Return List of Attached Schedules

Schedule O—Consent Plan and Apportionment Schedule Form 1125-A—Cost of Goods Sold Forms 8949—Sales and Other Dispositions of Capital Assets Form 4626—Alternative Minimum Tax—Corporations Schedule D—Capital Gains and Losses Schedule G (Form 1120)—Information on Certain Persons Owning the Corporation’s Voting Stock Form 1125-E—Compensation of Officers Attachment—Supporting Details

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Procedural note. Wording in the Code and Regs. for this limitation follows the procedure below, starting with Taxable Income (TI) [Form 1120, p. 1, ln. 30]. When preparing the return, TI is not known (that is what we are trying to compute). Hence, it is not practical to start with TI; an alternate approach is necessary. First, all items of income and deduction (other than charitable contribution deduction and dividends received deduction) should be determined. Next, the “taxable income base” is computed by adding/subtracting all numbers for calculation of TI on Form 1120, p. 1 except deductions for contributions, dividends received, net operating loss carryback, and capital loss carryback. Note that the “taxable income base” is calculated WITHOUT CONTRIBUTIONS DEDUCTION AND DIVIDENDS RECEIVED DEDUCTION. Due to this, an interdependent effect (which would require use of simultaneous equations to solve) is avoided. Proof: Taxable income .................................................................................... Adjustments to eliminate deductions for: Contributions ......................................................... $9,570 Dividends received ................................................ 66,052 Net operating loss carryback ................................. –0– Capital loss carryback

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