Unit 5 – Individual Project
Due Date: May 10, 2017 Max Points: 250
The owners of The Car Wash have asked you to prepare their tax return. Their financial statements are audited by a local certified public accounting (CPA) firm, and they have provided them to you as a reference. A copy of the Income Statement and Balance Sheet have been reproduced below. In your discussion, you obtained the following pieces of additional information to prepare the tax return:
- Name of business owner: Tim Smith, SSN:123-45-6789
- Tim Smith’s address: 8765 Warner Street, Huntington Beach, CA 92605
- Name of business owner: Jack Dillard, SSN: 987-65-4321
- Jack Dillard’s address: 4321 Courtyard Place, Huntington Beach, CA 92605
- Business name: The Car Wash
- Business address: 1046 Broadway Street, Huntington Beach, CA 92605
- Business description: Self-Service Car Wash
- Employer identification number: 99-8877665
- Date the business started: January 1, 2008
- Business will file its return using the cash basis of accounting
December 31, 20XX
Licenses and fees
Salaries and wages
Repairs and maintenance
Net income before taxes
January 1, 20XX
December 31, 20XX
Buildings and other depreciable assets
Liabilities and equity
Total liabilities and equity
Fill out form K-1 as Car Wash S corporation and car wash LLC.
Deliverable Length: 800–1,100 words
Your client has been informed that an S corporation is a popular business form and wants to know more about it. Please write a professional memo to your client responding to his inquiry. Be sure to at least discuss the following items:
- What is an S corporation?
- When is it advisable to be taxed as an S corporation?
- How does an organization become an S corporation?
- If The Car Wash is a corporation, can they be taxed as an S corporation?
- Why or why not?
- What criteria must be met?
- If The Car Wash is a LLC, can it be taxed as an S corporation?
- If so, what does it need to do to elect S corporation status?
- How would The Car Wash report and pay tax if it is an S corporation?
Please submit your assignment.
For assistance with your assignment, please use your text, Web resources, and all course materials.