– need help with this S-corporation tax return form 1120s. Here isDescriptionSolution downloadThe…

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– need help with this S-corporation tax return form 1120s. Here isDescriptionSolution downloadThe Questionneed help with this S-corporation tax return form 1120s. ?Here is the information:Refer to the facts in Tax Form/Return Preparation Problem C:9-58. Now assume the company is an S corporation rather than a partnership. Additional facts are as follows:?Drs. Bailey and Firth formed the corporation on January 1, 2012, and the corporation immediately elected S corporation status effective at the beginning of 2012.?Upon formation of the corporation, Dr. Bailey received common stock worth $1,080,000, and Dr. Firth received common stock worth $2,520,000 million.?The balance sheet information is the same as in?Table C:9-3?except the equity section is as follows:?January 1, 2013December 31, 2013Common stock$3,600,000$3,600,000Retained earnings102,780146,080?The $180,000 paid to Dr. Bailey is salary constituting W-2 wages (instead of a guaranteed payment). Ignore employment taxes (Social Security, etc.) on Dr. Bailey?s salary.?Qualified production activities income (QPAI) still equals $1.92 million, but employer?s W-2 wages allocable to U.S. production activities equal $1.01 million (because of Dr. Bailey?s salary). The company, being an eligible small pass-through S corporation, uses the small business simplification overall method for reporting these activities (see discussion for Line 12d of Schedule K and Line 12 of Schedule K-1 in the Form 1120S instructions).?Use?book?numbers?for?Schedule?L?and?Schedule?M-1?in?Form?1120S.Here?is?problem?c9-58:Healthwise Medical Supplies Company is located at 2400 Second Street, City, ST 12345. The company is a general partnership that uses the calendar year and accrual basis for both book and tax purposes. It engages in the development and sale of specialized surgical tools to hospitals. The employer identification number (EIN) is XX-2015013. The company formed and began business on January 1, 2012. It has no foreign partners or other foreign dealings. The company is neither a tax shelter nor a publicly traded partnership. The company has made no distributions other than cash, and no changes in ownership have occurred during the current year. Dr. Bailey is the Tax Matters Partner. The partnership makes no special elections.?Table C:9-3?contains book balance sheet information at the beginning and end of the current year, and?Table C:9-4?presents a book income statement for the current year. Other information follows:Information on Partnership Formation:?Two individuals formed the partnership on January 1, 2012: Dr. Leisa H. Bailey (1200 First Pike, City, ST 12345) and Dr. Thomas J. Firth (3600 Third Blvd., City, ST 54321). For a 30% interest, Dr. Bailey contributed $1,080,000 cash. She is an active general partner who manages the company. For a 70% interest, Dr. Firth contributed $2,088,000 cash and 1,000 shares of Fastgrowth, Inc. stock having, at the time of contribution, a $432,000 fair market value (FMV) and a $86,400 adjusted basis. Dr. Firth is an active general partner who designs and develops new products. For book purposes, the company recorded the contribution of stock at fair market value.Inventory and Cost of Goods Sold (Form 1125-A):The company uses the periodic inventory method and prices its inventory using the lower of FIFO cost or market. Only beginning inventory, ending inventory, and purchases should be reflected in Schedule A. No other costs or expenses are allocated to cost of goods sold. Note: the company is exempt from the uniform capitalization (UNICAP) rules because average gross income for the previous year was less than $10 million [Sec. 263A(b)(2)(B)].Line 9 (a)Check (ii)??????????(b)?(d)Not applicable??????????(e) & (f)NoCapital Gains and Losses (Schedule D):The company sold all 1,000 shares of the Fastgrowth, Inc. common stock on July


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