Fundamentals of Taxation 2011 4th Edition by Ana Cruz, Debra Prendergast, Dan Schisler, Michael Deschamps

Exercise 36

Harrell and Smith, Inc. 204 Ambulance Street, Anywhere, CA 92345, is a corporation (EIN 57-1234567) formed on January 1, 2007. Information concerning the corporation and its two shareholders follows. Harell and Smith uses the tax/cash basis accounting, did not pay dividends in excess of earnings and profits, has no foreign shareholders, is not publicly traded, and has no NOL carrybacks.
Bruce Harrell (SSN 412-34-5670), 1018 Lexington Downs, Anywhere, CA 92345 is a 60% shareholder. Della Smith (SSN 412-34-5671), 4564 Yates Rd., Anywhere, CA 92345, is a 40% shareholder. Bruce received a dividend of $60,000, and Della received a dividend of $40,000. Both of these dividends are in addition to their salaries.
Harrell and Smith Fuels, Inc.
Comparative Balance Sheet
As of December 31, 2009 and December 31, 2010
Assets:
Liabilities and Equity:
Harrell and Smith Fuels, Inc.
Income Statement
For the Year Ending December 31, 2010
Required: Prepare Form 1120 pages 1-5 for Harrell and Smith, Inc. Schedule D, and Form 4562 can be omitted (the information given is not sufficient to complete these forms).
***** Insert Form 1120, 5 pages here **********