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Charter fishing tours

Hi, I need help to fill out some tax forms. Thank you. Davy Jones…

Hi, I need help to fill out some tax forms. Thank you.

Davy Jones provides the following information for Davy Jones’ Nautical Tours, Inc, a C corporation which he operates with his business partner, William Turner.

Fill out Form 1120 U.S. Corporation Income Tax Return, an 1120 Statement 1 – Other Deductions, and an 1120 Schedule G – Information on Certain Persons Owning Stock

Davy Jones’ Nautical Tours, Inc, is operated by David K. Jones (SSN 000-00-0000) and William W. Turner (SSN 111-11-1111). They are each 50% common shareholders in the business.

Principal Business or Professional Activity Code; 114110

Principal business; Charter fishing tours

Employer Identification Number 867530950

Business address    

1008 North Harbor Drive   

San Diego, CA 92103   

Home address (David K. Jones)

8700 Lake Murray Blvd #2

San Diego, 92119

The cash accounting method and GAAP are utilized

The business was incorporated on January 1st, 2012

Wages consist of $25,000 paid to one employee and $15,000 to another

Officer’s Compensation; $42,000 payments to each officer, Jones and Turner.

None of this compensation is claimed on Form 1125-A (Cost of Goods Sold).

There is no preferred stock

Depreciation expense; The Jolly Roger was purchased for $850,000. The depreciation on the income statement is book depreciation and will differ from what is actually used on Line 20 Depreciation of form 1120. The boat is depreciated using the Modified Accelerated Cost Recovery System (MACRS), half year convention, is in its 4th year of service and the 10-year recovery period is used. Utilize Publication 946 How to Depreciate Property to calculate the correct depreciation amount to enter on the 1120 Line 20 (Form 4562 is not required). Locate Table A1 in the Appendix to calculate the tax-deductible depreciation. 

Interest expense is interest paid on the loan for the boat; the boat loan is considered nonrecourse

Insurance payments were made to cover liability for guests and for the boat

Payroll taxes; FICA and FUTA payments made on behalf of employees and corporate officers

Travel was purely for business purposes

Parking fines are tickets Jones received for parking illegally

Lease expense was paid to Honda Motors for his mother’s car lease, who is not involved in the business in any way

Estimated payments; The Corporation made four quarterly estimated tax payments of $1,000 

They’d like any overpayment refunded to them.

Davy Jones’ Nautical Tours, Inc. 2016 Income Statement

Revenue

$400,950.00

Wages

($40,000.00)

Officer’s Compensation

($84,000.00)

FICA

($9,486.00)

FUTA

($169.00)

Depreciation

($85,000.00)

Interest

($43,900.00)

Advertising

($6,350.00)

Supplies

($23,795.00)

Legal fees

($6,940.00)

Insurance

($26,700.00)

Boat slip rental

($33,010.00)

Travel

($6,250.00)

Office expense

($7,940.00)

Parking fines

($1,350.00)

Lease expense

($3,650.00)

Net Profit

$22,410.00

Davy Jones’ Nautical Tour, Inc   2016 Balance Sheet

 

1/1/2016

12/31/2016

Cash

$15,500.00

$15,500.00

Boat

$850,000.00

$850,000.00

Accumulated Depreciation

($255,000.00)

($340,000.00)

Total Assets

$610,500.00

$525,500.00

 

 

 

Loans

$525,000.00

$417,590.00

Equity Investment

$50,000.00

$50,000.00

Retained Earnings

$35,500.00

$57,910.00

Total Equity + Liability

$610,500.00

$525,500.00

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