1120 SBC, Inc. Case Study Facts: Data Entry

SBC, Inc. Case Study Facts: Introduction

Verifying SBC General Information

1. Select Quick Track > Entity Information.
   
   OR
   
   Select General Information > Basic Return Information > Entity Information tab.
2. Enter the missing information from below.

   Name	SBC, Inc.
   Address	482 Wilson Street Metro City, IL 43705
   EIN	12-3456789
   Date of election as an S Corporation	12/01/1997
   Date of ncorporation	12/01/1996
   Business Code	333333
   Business activity	Training
   Product or service	Widgets

3. Select General Information > Basic Return Information > Return Information tab.
4. Enter the missing information from below:

   Number of shareholders	6
   Method of accounting	Accrual

5. Select General Information > Questions > Schedule N, and scroll down to the section Financial Account in Foreign Country.
6. Select Yes for the question Did the corporation have an interest or signature or other authority over a financial account in a foreign country?
7. Enter Germany from the drop-down list.
8. Select General Information > Return and Print Options.
9. In the Accrual Options section, select Calculate ending balance sheet amount.

Share Transfer

On October 31, 2019, a share transfer occurred from Shareholder #6. Five hundred shares were transferred equally to the other five shareholders.

1. Select Shareholder Information > Share Transfers.
2. Enter 01/01/2019 and 10/31/2019 for Period 1 dates.
3. Enter 11/01/2019 and 12/31/2019 for Period 2 dates.
4. Enter transfer of stock information in Period 2:

   Shareholder	Number of Shares
   1	100
   2	100
   3	100
   4	100
   5	100
   6	-500

Schedule K

Contributions

1. Select Schedule K > Deductions > Deductions.
2. Enter Contributions for the first description line for 50% cash contributions.
3. Verify that the amount column contains $350,000.

Depreciation Adjustment

1. Select Schedule K > Alternative Minimum Tax Items.
2. Enter -1,243,101 for Post-1986 depreciation adjustment.

Foreign Taxes

1. Select Quick Track > Foreign Taxes.
   
   OR
   
   Select Schedule K > Foreign Transactions > Foreign Transactions.
2. Enter Germany as the foreign country.
3. Enter 535,000 as the Gross income sourced at the shareholder level.
4. Enter 80,000 as Total Foreign Taxes.
5. Enter 428,000 as Deductions allocated and apportioned at shareholder level (Other).

Other Items

1. Select Quick Track > Schedule K - Other Items.
   
   OR
   
   Select Schedule K > Items Affecting S/H Basis > Other Info.
2. For Tax Exempt Interest, enter 15,000 for Tax Exempt Interest Income (top line of group input section).
   
   A check box after the Other Tax Exempt Income input section stops amounts from flowing to the M-1. This option is already selected for you. Some amounts come from the journal entries.
3. For Other Nondeductible Expenses, scroll down, and enter 93,000 for Other Nondeductible Expenses (top of group input section).
4. For Distributions, enter 6,235,800 for Cash Distribution Amount under the Items Affecting Shareholder Basis input section.
5. For Other Items Reported Separately, enter 32,000 for Shareholder health insurance.

Income and Deduction

Officers’ Compensation

1. Select Quick Track > Officers Compensation > Enter Officer Detail.
   
   OR
   
   Select Income and Deductions > Deductions > Officers Compensation > Individual Officers > Add new Officer.
2. Enter the following:

   	Mark Lloyd	John Lloyd	Kathleen Jackson
   EIN	209-24-3160	200-36-6592	566-44-1115
   Address	4569 Webster St. Chicago, IL 60614	8909 Irving Park Road Chicago, IL 60649	1562 Downing Downers Grove, IL 65489
   % of time devoted to business	100%	100%	100%
   Percent of stock ownership	Common 50%	Common 20%	Common 20%
   Director?	Yes	No	No
   Title	President	Vice President	Chief Financial Officer
   Salary	$775,000	$400,000	$600,000

Depreciation

General Depreciation

1. Select Income and Deductions > Deductions > Depreciation and Amortization > General Depreciation and Amortization > 4562 Information > 4562 Overrides.
2. Enter the following information:

   	Basis	Recov.	Conv.	Method	Current Yr. Deprec.
   7 year	933,051	7.00	HY	200DB	133,333

3. Enter 1,615,300 for MACRS Deduction for assets placed in service during prior tax years.

Depreciation - Rental

1. Select Income and Deductions > Rental Activity > RRE-001 > Activity Information.
2. Enter 001 for the Activity Number.
3. Go to Income and Deductions > Deductions > Depreciation and Amortization > 4562 Information > Form 4562 Overrides.
4. Enter the following:

   	Basis	Recov.	Conv.	Method	Current Yr. Deprec.
   5 year	9,000,000	5.00	HY	200DB	1,800,000
   7 year	2,066,949	7.00	HY	200DB	295,367

5. On the same tab, enter the following for Nonres...:

   Date in Service	Basis	Current Yr. Depreciation
   09/01/2019	10,000,000	74,900

Gains and Losses

1. Select Quick Track > Schedule D / Form 4797 > Sales of Business Property.
   
   OR
   
   Select Gains and Losses > Disposition of Property > Disposition Detail > Create Disposition.
2. Enter Machinery & Equipment in the Description of Property entry box.
3. Under Disposition Type, click Select Form.
4. Click the drop-down arrow and click Form 4797.
5. Go to Type of Property, and click Select Type of Property.
6. Click the drop-down arrow, and click Section 1245.
7. Do an Auto Compute after the Type of Property is entered.
8. Select Sales of Business Property.
9. Click Machinery and Equipment.
10. Verify that the Description of Property is Machinery and Equipment and that the Type of Property is Section 1245.
11. Enter the following:

    Date acquired	01/01/2007
    Date sold	08/01/2019
    Gross Sales Price	50,000
    Cost or other basis	2,000,000
    Accumulated depreciation	2,000,000
    ACE accumulated depreciation	1,888,675

Accumulated Adjustment Account

1. Select Balance Sheet/M1-M2-M-3 > Schedule M1 / M2 > M2 Reconciliation tab.
2. Enter 8,575,566 as the AAA balance at the beginning of the year.

Transmittal Letter and Filing Instructions

1. Select Quick Track > Letters.
   
   OR
   
   Select Letters and Filing Instructions > General Options.
2. Select Separate Transmittal Letter and Filing Instructions.
3. Select Letters and Filing Instructions > Letter Options > Preparer Options.
4. Verify that this statement is selected in the S Corporations section: In addition, we are enclosing a Schedule K-1 for each shareholder. Please distribute as soon as possible.

State Returns

State Allocation and Apportionment

1. Select States > Allocation and Apportionment > A&A Activation.
2. Select the Activate Allocation and Apportionment Area check box.
3. Select A&A Data Entry, then each allocation factor.
4. Enter the beginning and/or ending amounts for the following allocation and apportionment factors:

   	Indiana		Iowa
   	Beginning	Ending	Beginning	Ending
   Property Data Entry
   Inventories	6,850,000	7,700,000
   Land	1,000,000	1,000,000		2,000,000
   Buildings	34,000,000	34,000,000		10,000,000
   Bldgs. Accum. Depr.	9,120,000	10,480,000		133,333
   Mach. & Equip.	35,000,000	33,000,000		9,000,000
   Mach. Accum. Depr.	35,000,000	33,000,000		600,000
   Furniture & Fixtures	6,000,000	6,000,000		3,000,000
   Furn.&Fix Accum. Dep.	6,000,000	6,000,000		200,000
   Rental-Tang. Per.		433,000
   Payroll Data Entry
   Other Salaries/Wages	19,155,000		1,000,000
   Sales Data Entry
   Within to Within State	86,000,000
   Within to Non-tax Juris.	48,000,000
   Rents			2,000,000
   Other Interest	80,000
   Real & Tang. Property	50,000
   Other Receipts	23,022

Indiana and Iowa Returns

To add Indiana and Iowa returns:

1. Select States > State and City Activation > State and City Activation.
2. Check the State Activation box in Column B for Indiana and Iowa.
3. Check the box in Column B for Allocation and Apportionment.

 

 

 

Case Study Facts/sbc_data_entry.htm/TY2019

Last Modified: 03/19/2020

Last System Build: 06/17/2021

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