Tax Forms - University of Kentuckydshuls00/phtax/Appendix_B_2018_Ed.pdf · The proprietorship uses MACRS depreciation for tax purposes. The current year tax depreciation is $27,476

Form # Form Title Page #

1040 Schedule C—Profit or Loss From Business B-3

1120 U.S. Corporation Income Tax Return B-7

7004 Application for Automatic Extension of Time to File Certain

Business Tax, Information, and Other Returns

B-17

2220 Underpayment of Estimated Tax By Corporations B-19

1120 Schedule M-3—Net Income (Loss) Reconciliation for Corporations B-21

4626 Alternative Minimum Tax—Corporations B-24

1120 Consolidated U.S. Corporation Income Tax Return B-25

1065 U.S. Return of Partnership Income B-28

1120S U.S. Income Tax Return for an S Corporation B-38

709 United States Gift (and Generation-Skipping Transfer) Tax Return B-48

706 United States Estate (and Generation-Skipping Transfer) Tax Return B-52

1041 U.S. Income Tax Return for Estates and Trusts (Simple Trust) B-66

1041 U.S. Income Tax Return for Estates and Trusts (Complex Trust) B-72

1116 Foreign Tax Credit B-79

2555 Foreign Earned Income B-81

B-1

BA P P E N D I X

Tax Forms

Z02_POPE0923_31_SE_APPB.indd 1 3/6/17 8:55 PM


Tax Forms ◀ Corporations B-3

Facts for sole Proprietorship (schedule C)

Andrew Lawrence is the sole proprietor of a business that operates under the name Andrew Lawrence Furniture (Business Code 337000). The proprietorship is located at 1234 First Avenue, City, ST 55555. Andrew started the business with a $200,000 capital investment on June 1, 2010. The proprietorship uses the calendar year as its tax year (the same as its proprietor) and the accrual method of accounting. The following information pertains to its 2016 activities:

A trial balance is included as part of the accompanying worksheet. Notes accompany-ing the account balances are presented below.

1. Cost of goods sold is determined as follows:

Inventory at beginning of year $ 64,000Plus: Purchases

Cost of laborAdditional Sec. 263A adjustmentOther costs

340,800143,204

7,000 90,000

Goods available for sale $645,004Minus: Inventory at end of year (104,800)Cost of goods sold $540,204

The proprietorship values its inventory using the first-in, first-out method and historical costs. The Sec. 263A rules apply to the proprietorship. No change in valuing inventories occurred between the beginning and end of the tax year.

2. The proprietorship uses MACRS depreciation for tax purposes. The current year tax depreciation is $27,476. Of this amount, $15,000 is included in cost of goods sold and inventory. The AMT depreciation adjustment on post-1986 personal property is $1,514. This amount is reported on Andrew Lawrence’s Form 6251 (Alternative Minimum Tax—Individuals), which is not reproduced here.

3. Using its excess funds, the proprietorship has purchased various temporary investments, including a 2% investment in Plaza Corporation stock, 50 shares of Service Corporation stock, and some tax-exempt municipal bonds. The proprietorship has held the Plaza stock for two years and sold it in July for $4,500 more than its $7,000 adjusted basis. Prior to the sale, Plaza paid a $1,000 dividend. The 50 shares of Service stock, which had been purchased during the year, was declared worthless during the year. The proprietorship recovered none of its $2,100 adjusted basis.

4. Employees other than Andrew Lawrence receive limited fringe benefits. One employee also receives a $2,000 contribution to an Individual Retirement Account paid by the proprietorship.

5. Miscellaneous expenses include $150 of expenses related to the production of the divi-dend income.

6. The proprietorship paid no estimated taxes.

7. Balance sheet information is not provided for the sole proprietorship because it is not reported on the Schedule C. Balance sheet information, however, can be found on page 4 of the C corporation tax return.

8. For additional information, see Schedule C and the worksheet on page B-6.


B-4 Corporations ▶ Appendix B

SCHEDULE C (Form 1040)

Department of the Treasury Internal Revenue Service (99)

Profit or Loss From Business (Sole Proprietorship)

Information about Schedule C and its separate instructions is at www.irs.gov/schedulec. Attach to Form 1040, 1040NR, or 1041; partnerships generally must file Form 1065.

OMB No. 1545-0074

16Attachment Sequence No. 09

Name of proprietor Social security number (SSN)

A Principal business or profession, including product or service (see instructions) B Enter code from instructions

C Business name. If no separate business name, leave blank. D Employer ID number (EIN), (see instr.)

E Business address (including suite or room no.)

City, town or post o�ce, state, and ZIP code F Accounting method: (1) Cash (2) Accrual (3) Other (specify)

G Did you “materially participate” in the operation of this business during 2016? If “No,” see instructions for limit on losses . Yes No

H If you started or acquired this business during 2016, check here . . . . . . . . . . . . . . . . .I Did you make any payments in 2016 that would require you to file Form(s) 1099? (see instructions) . . . . . . . . Yes No

J If "Yes," did you or will you file required Forms 1099? . . . . . . . . . . . . . . . . . . . . . Yes No

Part I Income 1 Gross receipts or sales. See instructions for line 1 and check the box if this income was reported to you on

Form W-2 and the “Statutory employee” box on that form was checked . . . . . . . . . 12 Returns and allowances . . . . . . . . . . . . . . . . . . . . . . . . . 2 3 Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . 3 4 Cost of goods sold (from line 42) . . . . . . . . . . . . . . . . . . . . . . 4 5 Gross profit. Subtract line 4 from line 3 . . . . . . . . . . . . . . . . . . . . 5 6 Other income, including federal and state gasoline or fuel tax credit or refund (see instructions) . . . . 6 7 Gross income. Add lines 5 and 6 . . . . . . . . . . . . . . . . . . . . . 7

Part II Expenses. Enter expenses for business use of your home only on line 30. 8 Advertising . . . . . 8

9

Car and truck expenses (see instructions) . . . . . 9

10 Commissions and fees . 10 11 Contract labor (see instructions) 11 12 Depletion . . . . . 12 13

Depreciation and section 179 expense deduction (not included in Part III) (see instructions) . . . . . 13

14

Employee benefit programs (other than on line 19) . . 14

15 Insurance (other than health) 15 16 Interest:

a Mortgage (paid to banks, etc.) 16ab Other . . . . . . 16b

17 Legal and professional services 17

18 O�ce expense (see instructions) 18 19 Pension and profit-sharing plans . 19 20 Rent or lease (see instructions):

a Vehicles, machinery, and equipment 20ab Other business property . . . 20b

21 Repairs and maintenance . . . 21 22 Supplies (not included in Part III) . 22 23 Taxes and licenses . . . . . 23 24 Travel, meals, and entertainment:

a Travel . . . . . . . . . 24a

b

Deductible meals and entertainment (see instructions) . 24b

25 Utilities . . . . . . . . 25 26 Wages (less employment credits) . 26 27 a Other expenses (from line 48) . . 27a

b Reserved for future use . . . 27b28 Total expenses before expenses for business use of home. Add lines 8 through 27a . . . . . . 28 29 Tentative profit or (loss). Subtract line 28 from line 7 . . . . . . . . . . . . . . . . . 29 30 Expenses for business use of your home. Do not report these expenses elsewhere. Attach Form 8829

unless using the simplified method (see instructions). Simplified method filers only: enter the total square footage of: (a) your home:

and (b) the part of your home used for business: . Use the SimplifiedMethod Worksheet in the instructions to figure the amount to enter on line 30 . . . . . . . . . 30

31 Net profit or (loss). Subtract line 30 from line 29.

• If a profit, enter on both Form 1040, line 12 (or Form 1040NR, line 13) and on Schedule SE, line 2. (If you checked the box on line 1, see instructions). Estates and trusts, enter on Form 1041, line 3. • If a loss, you must go to line 32.

} 31

32 If you have a loss, check the box that describes your investment in this activity (see instructions).

• If you checked 32a, enter the loss on both Form 1040, line 12, (or Form 1040NR, line 13) and on Schedule SE, line 2. (If you checked the box on line 1, see the line 31 instructions). Estates and trusts, enter on Form 1041, line 3. • If you checked 32b, you must attach Form 6198. Your loss may be limited.

} 32a All investment is at risk. 32b Some investment is not

at risk.

For Paperwork Reduction Act Notice, see the separate instructions. Cat. No. 11334P Schedule C (Form 1040) 2016

Andrew Lawrence

Manufacturing Furniture

1234 AvenueCity, ST 55555

xx

x

XXX-XX-XXXX

3 3 7 0 0 0

x x x x x x x x x

869,65829,242

840,416540,204300,212

300,212

16,0002,000

36,000

9,840

4,000

4,000

52,0008,650

184,366

115,846

115,846

13,000

4,00010,400

12,476

4,000

8,000



Schedule C (Form 1040) 2016 Page 2 Part III Cost of Goods Sold (see instructions)

33

Method(s) used to value closing inventory: a Cost b Lower of cost or market c Other (attach explanation)

34

Was there any change in determining quantities, costs, or valuations between opening and closing inventory? If “Yes,” attach explanation . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No

35 Inventory at beginning of year. If di�erent from last year’s closing inventory, attach explanation . . . 35

36 Purchases less cost of items withdrawn for personal use . . . . . . . . . . . . . . 36

37 Cost of labor. Do not include any amounts paid to yourself . . . . . . . . . . . . . . 37

38 Materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . 38

39 Other costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

40 Add lines 35 through 39 . . . . . . . . . . . . . . . . . . . . . . . . 40

41 Inventory at end of year . . . . . . . . . . . . . . . . . . . . . . . . 41

42 Cost of goods sold. Subtract line 41 from line 40. Enter the result here and on line 4 . . . . . . 42 Part IV Information on Your Vehicle. Complete this part only if you are claiming car or truck expenses on line 9

and are not required to file Form 4562 for this business. See the instructions for line 13 to find out if you must file Form 4562.

43 When did you place your vehicle in service for business purposes? (month, day, year) / /

44 Of the total number of miles you drove your vehicle during 2016, enter the number of miles you used your vehicle for:

a Business b Commuting (see instructions) c Other

45 Was your vehicle available for personal use during o�-duty hours? . . . . . . . . . . . . . . . Yes No

46 Do you (or your spouse) have another vehicle available for personal use?. . . . . . . . . . . . . . Yes No

47a Do you have evidence to support your deduction? . . . . . . . . . . . . . . . . . . . . Yes No

b If “Yes,” is the evidence written? . . . . . . . . . . . . . . . . . . . . . . . . . Yes No

Part V Other Expenses. List below business expenses not included on lines 8–26 or line 30.

48 Total other expenses. Enter here and on line 27a . . . . . . . . . . . . . . . . 48

Schedule C (Form 1040) 2016

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143,204

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Facts for C Corporation (Form 1120)

The same basic facts presented for the Andrew Lawrence proprietorship are used for the C corporation except for the following:

1. Andrew Lawrence and Stephen Johns are the two 50% shareholders of Johns and Law-rence, Inc., a furniture manufacturer (Business Code 337000). Johns and Lawrence is located at 1234 First Avenue, City, ST 55555. The following information pertains to the 2016 corporate tax return:

Compensation of Officers

Name Share Title CompensationStephen Johns 1,000 President $18,000Andrew Lawrence 1,000 V.P. 18,000Total 2,000 $36,000

The corporation paid all salaries owed to the shareholders in 2016. The corporation paid none of the interest or rentals to the shareholders.

2. The book income for the corporation appears in the attached worksheet, which reconciles the corporation’s book income and its taxable income before special deductions.

3. The company was incorporated on June 1, 2010. Each of the two officers hold one-half the stock, which they acquired on that date for a total cash and property contribution of $200,000. No change in the stockholdings has occurred since incorporation. Johns and Lawrence each devote 100% of their time to the business. The corporation provides no expense allowances. The corporation, however, reimburses properly substantiated ex-penses. Both officers are U.S. citizens. Johns and Lawrence is not a member of a controlled group.

4. Addresses for the officers are: Andrew Lawrence, 333 Third Street, City, ST 55555; Stephen Johns, 777 Seventh Street, City, ST 55555.

5. The corporation paid estimated taxes of $14,000 for tax year 2015.

6. Other deductions include:

Travel $ 4,000Meals and entertainment 8,000Minus: 50% disallowance (4,000)Office expenses 16,000Transportation 10,400General and administrative 3,000Miscellaneous 1,000

Total $38,400

7. The charitable contributions deduction limitation is $7,694 (see footnote b in Reconcilia-tion worksheet on page B-16). The remaining $4,306 ($12,000 2 $7,694) carries over to 2017 and the four succeeding tax years.



8. Qualified production activities income (QPAI) equals $80,000. Employer’s W-2 wages allocable to U.S. production activities equal $88,000.

9. The $28,212 of withdrawals made by the two owners are dividends out of the corpora-tion’s earnings and profits. They are reported as gross income on the shareholders’ indi-vidual tax returns.

10. The beginning-of-the-year balance sheets for all entity forms are the same, which permits a direct comparison of the 2016 tax differences. Actually, the corporation would have reported tax differences in all prior years (2010 through 2015), which would have been included in the January 1, 2016 balance sheet. If these differences were so included, the direct comparisons would be much more difficult.

11. For additional information, see the worksheet on page B-16.



Michael Prepper

Form 1120Department of the Treasury Internal Revenue Service

U.S. Corporation Income Tax ReturnFor calendar year 2016 or tax year beginning , 2016, ending , 20

Information about Form 1120 and its separate instructions is at www.irs.gov/form1120.

OMB No. 1545-0123

16

TYPE OR PRINT

Name

Number, street, and room or suite no. If a P.O. box, see instructions.

City or town, state, or province, country and ZIP or foreign postal code

A Check if:1a Consolidated return

(attach Form 851) . b Life/nonlife consoli-

dated return . . .2 Personal holding co.

(attach Sch. PH) . .3 Personal service corp.

(see instructions) . .4 Schedule M-3 attached

B Employer identification number

C Date incorporated

D Total assets (see instructions)

$E Check if: (1) Initial return (2) Final return (3) Name change (4) Address change

Inco

me

1a Gross receipts or sales . . . . . . . . . . . . . . . . . 1ab Returns and allowances . . . . . . . . . . . . . . . . . 1bc Balance. Subtract line 1b from line 1a . . . . . . . . . . . . . . . . . . . . . 1c

2 Cost of goods sold (attach Form 1125-A) . . . . . . . . . . . . . . . . . . . . 23 Gross profit. Subtract line 2 from line 1c . . . . . . . . . . . . . . . . . . . . 34 Dividends (Schedule C, line 19) . . . . . . . . . . . . . . . . . . . . . . 45 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Gross rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Gross royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Capital gain net income (attach Schedule D (Form 1120)) . . . . . . . . . . . . . . . 89 Net gain or (loss) from Form 4797, Part II, line 17 (attach Form 4797) . . . . . . . . . . . 9

10 Other income (see instructions—attach statement) . . . . . . . . . . . . . . . . . 1011 Total income. Add lines 3 through 10 . . . . . . . . . . . . . . . . . . . . . 11

Ded

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ns.) 12 Compensation of o�cers (see instructions—attach Form 1125-E) . . . . . . . . . . . . 12

13 Salaries and wages (less employment credits) . . . . . . . . . . . . . . . . . . 1314 Repairs and maintenance . . . . . . . . . . . . . . . . . . . . . . . . 1415 Bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1516 Rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1617 Taxes and licenses . . . . . . . . . . . . . . . . . . . . . . . . . . 1718 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1819 Charitable contributions . . . . . . . . . . . . . . . . . . . . . . . . . 1920 Depreciation from Form 4562 not claimed on Form 1125-A or elsewhere on return (attach Form 4562) . . 2021 Depletion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2122 Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2223 Pension, profit-sharing, etc., plans . . . . . . . . . . . . . . . . . . . . . 2324 Employee benefit programs . . . . . . . . . . . . . . . . . . . . . . . 2425 Domestic production activities deduction (attach Form 8903) . . . . . . . . . . . . . . 2526 Other deductions (attach statement) . . . . . . . . . . . . . . . . . . . . . 2627 Total deductions. Add lines 12 through 26 . . . . . . . . . . . . . . . . . . . 2728 Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line 11. 2829a Net operating loss deduction (see instructions) . . . . . . . . . . 29a

b Special deductions (Schedule C, line 20) . . . . . . . . . . . . 29bc Add lines 29a and 29b . . . . . . . . . . . . . . . . . . . . . . . . . 29c

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30 Taxable income. Subtract line 29c from line 28. See instructions . . . . . . . . . . . . 3031 Total tax (Schedule J, Part I, line 11) . . . . . . . . . . . . . . . . . . . . . 3132 Total payments and refundable credits (Schedule J, Part II, line 21) . . . . . . . . . . . . 3233 Estimated tax penalty. See instructions. Check if Form 2220 is attached . . . . . . . . 3334 Amount owed. If line 32 is smaller than the total of lines 31 and 33, enter amount owed . . . . . 3435 Overpayment. If line 32 is larger than the total of lines 31 and 33, enter amount overpaid . . . . . 3536 Enter amount from line 35 you want: Credited to 2017 estimated tax Refunded 36

Sign Here

Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.

Signature of o�cer Date Title

May the IRS discuss this return with the preparer shown below? See instructions. Yes No

Paid Preparer Use Only

Print/Type preparer’s name Preparer's signature DateCheck if self-employed

PTIN

Firm’s name Firm's EIN

Firm's address Phone no.

For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11450Q Form 1120 (2016)



1,000

1,000

700

700

700

70

80

see instructions

42

48

70

80

100

100

100

100

Form 1120 (2016) Page 2Schedule C Dividends and Special Deductions (see instructions) (a) Dividends

received (b) % (c) Special deductions (a) × (b)

1

Dividends from less-than-20%-owned domestic corporations (other than debt-financed stock) . . . . . . . . . . . . . . . . . . . . . . . .

2

Dividends from 20%-or-more-owned domestic corporations (other than debt-financed stock) . . . . . . . . . . . . . . . . . . . . . . . .

3 Dividends on debt-financed stock of domestic and foreign corporations . . . . .

4 Dividends on certain preferred stock of less-than-20%-owned public utilities . . .

5 Dividends on certain preferred stock of 20%-or-more-owned public utilities . . . .

6 Dividends from less-than-20%-owned foreign corporations and certain FSCs . . .

7 Dividends from 20%-or-more-owned foreign corporations and certain FSCs . . .

8 Dividends from wholly owned foreign subsidiaries . . . . . . . . . . .

9 Total. Add lines 1 through 8. See instructions for limitation . . . . . . . .

10

Dividends from domestic corporations received by a small business investment company operating under the Small Business Investment Act of 1958 . . . . .

11 Dividends from a�liated group members . . . . . . . . . . . . . .

12 Dividends from certain FSCs . . . . . . . . . . . . . . . . .

13 Dividends from foreign corporations not included on lines 3, 6, 7, 8, 11, or 12 . . .

14 Income from controlled foreign corporations under subpart F (attach Form(s) 5471) .

15 Foreign dividend gross-up . . . . . . . . . . . . . . . . . .

16 IC-DISC and former DISC dividends not included on lines 1, 2, or 3 . . . . . .

17 Other dividends . . . . . . . . . . . . . . . . . . . . .

18 Deduction for dividends paid on certain preferred stock of public utilities . . . .

19 Total dividends. Add lines 1 through 17. Enter here and on page 1, line 4 . . .

20 Total special deductions. Add lines 9, 10, 11, 12, and 18. Enter here and on page 1, line 29b . . . . . . . Form 1120 (2016)



10,593

10,593

-0- 10,593

-0- 10,593

-0-

x

x

x

x

14,000

14,000

14,000

14,000

337,000ManufacturingFurniture

*Schedule G is not attached. If attached, it would list the same individuals listed on Form 1125-E.

*

Form 1120 (2016) Page 3Schedule J Tax Computation and Payment (see instructions)

Part I–Tax Computation1 Check if the corporation is a member of a controlled group (attach Schedule O (Form 1120)). See instructions 2 Income tax. Check if a qualified personal service corporation. See instructions . . . . . . . . . 2 3 Alternative minimum tax (attach Form 4626) . . . . . . . . . . . . . . . . . . . . 3 4 Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 5 a Foreign tax credit (attach Form 1118) . . . . . . . . . . . . . . 5a

b Credit from Form 8834 (see instructions) . . . . . . . . . . . . . 5b c General business credit (attach Form 3800) . . . . . . . . . . . . 5c d Credit for prior year minimum tax (attach Form 8827) . . . . . . . . . 5d e Bond credits from Form 8912 . . . . . . . . . . . . . . . . 5e

6 Total credits. Add lines 5a through 5e . . . . . . . . . . . . . . . . . . . . . 6 7 Subtract line 6 from line 4 . . . . . . . . . . . . . . . . . . . . . . . . . 7 8 Personal holding company tax (attach Schedule PH (Form 1120)) . . . . . . . . . . . . . . 8 9 a Recapture of investment credit (attach Form 4255) . . . . . . . . . . 9a

b Recapture of low-income housing credit (attach Form 8611) . . . . . . . 9b

c Interest due under the look-back method—completed long-term contracts (attach Form 8697) . . . . . . . . . . . . . . . . . . . . . . 9c

d Interest due under the look-back method—income forecast method (attach Form 8866) . . . . . . . . . . . . . . . . . . . . . . . 9d

e Alternative tax on qualifying shipping activities (attach Form 8902) . . . . . 9ef Other (see instructions—attach statement) . . . . . . . . . . . . 9f

10 Total. Add lines 9a through 9f . . . . . . . . . . . . . . . . . . . . . . . . 10 11 Total tax. Add lines 7, 8, and 10. Enter here and on page 1, line 31 . . . . . . . . . . . . . 11

Part II–Payments and Refundable Credits 12 2015 overpayment credited to 2016 . . . . . . . . . . . . . . . . . . . . . . 12 13 2016 estimated tax payments . . . . . . . . . . . . . . . . . . . . . . . . 13 14 2016 refund applied for on Form 4466 . . . . . . . . . . . . . . . . . . . . . . 14 ( )15 Combine lines 12, 13, and 14 . . . . . . . . . . . . . . . . . . . . . . . . 15 16 Tax deposited with Form 7004 . . . . . . . . . . . . . . . . . . . . . . . . 16 17 Withholding (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . 1718 Total payments. Add lines 15, 16, and 17 . . . . . . . . . . . . . . . . . . . . . 1819 Refundable credits from:

a Form 2439 . . . . . . . . . . . . . . . . . . . . . . 19ab Form 4136 . . . . . . . . . . . . . . . . . . . . . . 19bc Form 8827, line 8c . . . . . . . . . . . . . . . . . . . 19cd Other (attach statement—see instructions). . . . . . . . . . . . . 19d

20 Total credits. Add lines 19a through 19d . . . . . . . . . . . . . . . . . . . . . 2021 Total payments and credits. Add lines 18 and 20. Enter here and on page 1, line 32 . . . . . . . . 21Schedule K Other Information (see instructions)

1 Check accounting method: a Cash b Accrual c Other (specify) Yes No

2 See the instructions and enter the:a Business activity code no.

b Business activity

c Product or service

3 Is the corporation a subsidiary in an a�liated group or a parent-subsidiary controlled group? . . . . . . . . . .If “Yes,” enter name and EIN of the parent corporation

4 At the end of the tax year:

a Did any foreign or domestic corporation, partnership (including any entity treated as a partnership), trust, or tax-exempt organization own directly 20% or more, or own, directly or indirectly, 50% or more of the total voting power of all classes of the corporation’s stock entitled to vote? If "Yes," complete Part I of Schedule G (Form 1120) (attach Schedule G) . . . . . .

b Did any individual or estate own directly 20% or more, or own, directly or indirectly, 50% or more of the total voting power of all classes of the corporation’s stock entitled to vote? If "Yes," complete Part II of Schedule G (Form 1120) (attach Schedule G) .

Form 1120 (2016)



X

X

X

X

X

X

X

X

X

X

X

-0-

18,0002

Form 1120 (2016) Page 4Schedule K Other Information (continued from page 3)

Yes No

5 At the end of the tax year, did the corporation:

a Own directly 20% or more, or own, directly or indirectly, 50% or more of the total voting power of all classes of stock entitled to vote of any foreign or domestic corporation not included on Form 851, A�liations Schedule? For rules of constructive ownership, see instructions.If “Yes,” complete (i) through (iv) below.

(i) Name of Corporation(ii) Employer

Identification Number(if any)

(iii) Country ofIncorporation

(iv) PercentageOwned in Voting

Stock

b Own directly an interest of 20% or more, or own, directly or indirectly, an interest of 50% or more in any foreign or domestic partnership (including an entity treated as a partnership) or in the beneficial interest of a trust? For rules of constructive ownership, see instructions. If “Yes,” complete (i) through (iv) below.

(i) Name of Entity(ii) Employer

Identification Number(if any)

(iii) Country ofOrganization

(iv) MaximumPercentage Owned inProfit, Loss, or Capital

6 During this tax year, did the corporation pay dividends (other than stock dividends and distributions in exchange for stock) in excess of the corporation’s current and accumulated earnings and profits? See sections 301 and 316 .. . . . . . .If "Yes," file Form 5452, Corporate Report of Nondividend Distributions.If this is a consolidated return, answer here for the parent corporation and on Form 851 for each subsidiary.

7 At any time during the tax year, did one foreign person own, directly or indirectly, at least 25% of (a) the total voting power of all classes of the corporation’s stock entitled to vote or (b) the total value of all classes of the corporation’s stock? . . . .

For rules of attribution, see section 318. If “Yes,” enter:(i) Percentage owned and (ii) Owner’s country

(c) The corporation may have to file Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business. Enter the number of Forms 5472 attached

8 Check this box if the corporation issued publicly o�ered debt instruments with original issue discount . . . . . .If checked, the corporation may have to file Form 8281, Information Return for Publicly O�ered Original Issue Discount Instruments.

9 Enter the amount of tax-exempt interest received or accrued during the tax year $

10 Enter the number of shareholders at the end of the tax year (if 100 or fewer)

11 If the corporation has an NOL for the tax year and is electing to forego the carryback period, check here . . . . .

If the corporation is filing a consolidated return, the statement required by Regulations section 1.1502-21(b)(3) must be attached or the election won't be valid.

12 Enter the available NOL carryover from prior tax years (don't reduce it by any deduction on line 29a.) $

13 Are the corporation’s total receipts (page 1, line 1a, plus lines 4 through 10) for the tax year and its total assets at the end of the tax year less than $250,000? . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

If “Yes,” the corporation isn't required to complete Schedules L, M-1, and M-2. Instead, enter the total amount of cash distributions andthe book value of property distributions (other than cash) made during the tax year $

14 Is the corporation required to file Schedule UTP (Form 1120), Uncertain Tax Position Statement? See instructions .. . . .If “Yes,” complete and attach Schedule UTP.

15a Did the corporation make any payments in 2016 that would require it to file Form(s) 1099? . . . . . . . . . . .b If “Yes,” did or will the corporation file required Forms 1099? . . . . . . . . . . . . . . . . . . . .

16 During this tax year, did the corporation have an 80% or more change in ownership, including a change due to redemption of its own stock? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17 During or subsequent to this tax year, but before the filing of this return, did the corporation dispose of more than 65% (by of its assets in a taxable, non-taxable, or tax deferred transaction? . . . . . . . . . . . . . . . . . .

. . . . . . . .18

19

Did the corporation receive assets in a section 351 transfer in which any of the transferred assets had a fair market basis or fair market value of more than $1 million? During the corporation's tax year, did the corporation make any payments that would require it to file Forms 1042 and 1042-Sunder chapter 3 (sections 1441 through 1464) or chapter 4 (sections 1471 through 1474) of the Code?

. . . . . . . . . . . . . . . . . . .

. . . . . . . .

Form 1120 (2016)

value)



25,0001,000

151,60045,200

200,000

63,41214,000

10,30687,718

97,80063,412

161,212

60,000

24,00064,000

200,0007,000

106,400

461,400

26,0004,0003,600

130,000

200,000

97,800

461,400

24,0001,000

151,60072,676

200,000

72,600

23,000104,800

200,000

78,924

479,324

19,0004,0003,600

119,724

200,000

133,000

479,324

18,000

6,64524,64563,073

28,212

28,2 12133,000

4,3064,000 U.S. prod. act. ded. $6,169

18,000

476

Nondeductable interest* $2,000

*On loans to acquire municipal bonds.

Form 1120 (2016) Page 5Schedule L Balance Sheets per Books Beginning of tax year End of tax year

( ) ( )

( ) ( )

( ) ( )

( ) ( )

( ) ( )

Assets (a) (b) (c) (d)

1 Cash . . . . . . . . . . . .2a Trade notes and accounts receivable . . .b Less allowance for bad debts . . . . .

3 Inventories . . . . . . . . . . .4 U.S. government obligations . . . . .5 Tax-exempt securities (see instructions) . .6 Other current assets (attach statement) . .7 Loans to shareholders . . . . . . .8 Mortgage and real estate loans . . . . .9 Other investments (attach statement) . . .

10a Buildings and other depreciable assets . .b Less accumulated depreciation . . . . .

11a Depletable assets . . . . . . . . .b Less accumulated depletion . . . . . .

12 Land (net of any amortization) . . . . .13a Intangible assets (amortizable only) . . .

b Less accumulated amortization . . . . .14 Other assets (attach statement) . . . . .15 Total assets . . . . . . . . . .

Liabilities and Shareholders’ Equity16 Accounts payable . . . . . . . . .17 Mortgages, notes, bonds payable in less than 1 year18 Other current liabilities (attach statement) . .19 Loans from shareholders . . . . . . .20 Mortgages, notes, bonds payable in 1 year or more21 Other liabilities (attach statement) . . . .22 Capital stock: a Preferred stock . . . .

b Common stock . . . .23 Additional paid-in capital . . . . . . .24 Retained earnings—Appropriated (attach statement)25 Retained earnings—Unappropriated . . .26 Adjustments to shareholders’ equity (attach statement)27 Less cost of treasury stock . . . . . .28 Total liabilities and shareholders’ equity . .

Schedule M-1 Reconciliation of Income (Loss) per Books With Income per Return Note: The corporation may be required to file Schedule M-3. See instructions.

1 Net income (loss) per books . . . . . .2 Federal income tax per books . . . . .3 Excess of capital losses over capital gains .

4 Income subject to tax not recorded on books this year (itemize):

5 Expenses recorded on books this year not deducted on this return (itemize):

a Depreciation . . . . $

b Charitable contributions . $

c Travel and entertainment . $

6 Add lines 1 through 5 . . . . . . . .

7 Income recorded on books this year not included on this return (itemize):Tax-exempt interest $

8 Deductions on this return not charged against book income this year (itemize):

a Depreciation . . $

b Charitable contributions $

9 Add lines 7 and 8 . . . . . . 10 Income (page 1, line 28)—line 6 less line 9

Schedule M-2 Analysis of Unappropriated Retained Earnings per Books (Line 25, Schedule L)1 Balance at beginning of year . . . . .2 Net income (loss) per books . . . . . .3 Other increases (itemize):

4 Add lines 1, 2, and 3 . . . . . . . .

5 Distributions: a Cash . . . .b Stock . . . .c Property . . .

6 Other decreases (itemize):

7 Add lines 5 and 6 . . . . . .8 Balance at end of year (line 4 less line 7)

Form 1120 (2016)



Form 1125-A(Rev. December 2012)

Department of the Treasury Internal Revenue Service

Cost of Goods Sold

Attach to Form 1120, 1120-C, 1120-F, 1120S, 1065, or 1065-B.Information about Form 1125-A and its instructions is at www.irs.gov/form1125a.

OMB No. 1545-2225

Name Employer identification number

1 Inventory at beginning of year . . . . . . . . . . . . . . . . . . . . . 12 Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Cost of labor . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Additional section 263A costs (attach schedule) . . . . . . . . . . . . . . . . 45 Other costs (attach schedule) . . . . . . . . . . . . . . . . . . . . . 56 Total. Add lines 1 through 5 . . . . . . . . . . . . . . . . . . . . . . 67 Inventory at end of year . . . . . . . . . . . . . . . . . . . . . . . 7

8 Cost of goods sold. Subtract line 7 from line 6. Enter here and on Form 1120, page 1, line 2 or the appropriate line of your tax return (see instructions) . . . . . . . . . . . . . . . 8

9a Check all methods used for valuing closing inventory:(i) Cost(ii) Lower of cost or market(iii) Other (Specify method used and attach explanation.)

b Check if there was a writedown of subnormal goods . . . . . . . . . . . . . . . . . . . . . .c Check if the LIFO inventory method was adopted this tax year for any goods (if checked, attach Form 970) . . . . . .

d If the LIFO inventory method was used for this tax year, enter amount of closing inventory computed under LIFO . . . . . . . . . . . . . . . . . . . . . . . . . . . 9d

e If property is produced or acquired for resale, do the rules of section 263A apply to the entity (see instructions)? . . Yes No

f Was there any change in determining quantities, cost, or valuations between opening and closing inventory? If “Yes,” attach explanation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Yes No

Section references are to the Internal Revenue Code unless otherwise noted.

General InstructionsPurpose of FormUse Form 1125-A to calculate and deduct cost of goods sold for certain entities.

Who Must FileFilers of Form 1120, 1120-C, 1120-F, 1120S, 1065, or 1065-B, must complete and attach Form 1125-A if the applicable entity reports a deduction for cost of goods sold.

Inventories Generally, inventories are required at the beginning and end of each tax year if the production, purchase, or sale of merchandise is an income-producing factor. See Regulations section 1.471-1. If inventories are required, you generally must use an accrual method of accounting for sales and purchases of inventory items.Exception for certain taxpayers. If you are a qualifying taxpayer or a qualifying small business taxpayer (defined below), you can adopt or change your accounting method to account for inventoriable items in the same manner as materials and supplies that are not incidental.

Under this accounting method, inventory costs for raw materials purchased for use in producing finished goods and merchandise purchased for resale are deductible in the year the finished goods or merchandise are sold (but not before the year you paid for the raw materials or merchandise, if you are also using the cash method).

If you account for inventoriable items in the same manner as materials and supplies that are not incidental, you can currently deduct expenditures for direct labor and all indirect costs that would otherwise be included in inventory costs. See the instructions for lines 2 and 7.

For additional guidance on this method of accounting, see Pub. 538, Accounting Periods and Methods. For guidance on adopting or changing to this method of accounting, see Form 3115, Application for Change in Accounting Method, and its instructions.

Qualifying taxpayer. A qualifying taxpayer is a taxpayer that, (a) for each prior tax year ending after December 16, 1998, has average annual gross receipts of $1 million or less for the 3 prior tax years and (b) its business is not a tax shelter (as defined in section 448(d)(3)). See Rev. Proc. 2001-10, 2001-2 I.R.B. 272.

Qualifying small business taxpayer. A qualifying small business taxpayer is a taxpayer that, (a) for each prior tax year

ending on or after December 31, 2000, has average annual gross receipts of $10 million or less for the 3 prior tax years, (b) whose principal business activity is not an ineligible activity, and (c) whose business is not a tax shelter (as defined in section 448(d)(3)). See Rev. Proc. 2002-28, 2002-18 I.R.B. 815.Uniform capitalization rules. The uniform capitalization rules of section 263A generally require you to capitalize, or include in inventory, certain costs incurred in connection with the following.• The production of real property and tangible personal property held in inventory or held for sale in the ordinary course of business.• Real property or personal property (tangible and intangible) acquired for resale.• The production of real property and tangible personal property by a corporation for use in its trade or business or in an activity engaged in for profit.

See the discussion on section 263A uniform capitalization rules in the instructions for your tax return before completing Form 1125-A. Also see Regulations sections 1.263A-1 through 1.263A-3. See Regulations section 1.263A-4 for rules for property produced in a farming business.

For Paperwork Reduction Act Notice, see instructions. Cat. No. 55988R Form 1125-A (Rev. 12-2012)

Johns and Lawrence, Inc. XX-XXXXXXX64,000

340,800143,204

7,00090,000

645,004104,800540,204

x

x

x



Johns and Lawrence, Inc.

Stephen Johns XXX-XX-XXXX 100 50

XXX-XX-XXXX 100 50

18,000

18,000

36,000

36,000

Andrew Lawrence

XX-XXXXXXX

Form 1125-E(Rev. December 2013)


Compensation of OfficersAttach to Form 1120, 1120-C, 1120-F, 1120-REIT, 1120-RIC, or 1120S.

Information about Form 1125-E and its separate instructions is at www.irs.gov/form1125e.

OMB No. 1545-2225


Note. Complete Form 1125-E only if total receipts are $500,000 or more. See instructions for definition of total receipts.

(a) Name of o�cer (b) Social security number(see instructions)

(c) Percent oftime devoted to

business

Percent of stock owned (f) Amount ofcompensation(d) Common (e) Preferred

1 % % %

% % %

% % %

% % %

% % %

% % %

% % %

% % %

% % %

% % %

% % %

% % %

% % %

% % %

% % %

% % %

% % %

% % %

% % %

% % %

2 Total compensation of o�cers . . . . . . . . . . . . . . . . . . . . . . . 2

3 Compensation of o�cers claimed on Form 1125-A or elsewhere on return . . . . . . . . 3

4 Subtract line 3 from line 2. Enter the result here and on Form 1120, page 1, line 12 or theappropriate line of your tax return . . . . . . . . . . . . . . . . . . . . . . 4

For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 55989C Form 1125-E (Rev. 12-2013)



Johns and Lawrence, Inc. (C Corporation) Reconciliation of Book Income to Taxable Income before Special Deductions for Year Ending December 31, 2016

Book Income Adjustments Taxable Income

Account Name Debit Credit Debit Credit Debit Credit

Sales $869,658 $869,658Sales returns & allowances $ 29,242 $ 29,242 Cost of sales 540,204 540,204 Dividends 1,000 1,000Tax-exempt interest 18,000 $18,000 0Gain on stock sale 4,500 4,500Worthless stock loss 2,100 2,100 Officers’ salaries 36,000 36,000 Other salaries 52,000 52,000 Rentals 36,000 36,000 Bad debts 4,000 4,000 Interest: Working capital loans 8,000 8,000 Purchase tax-exempt bonds 2,000 $ 2,000 0 Employment taxes 14,480 14,480 Taxes 1,520 1,520 Repairs 4,800 4,800 Depreciation(a) 12,000 476 12,476 Charitable contributions(b) 12,000 4,306 7,694 Travel 4,000 4,000 Meals and entertainment(c) 8,000 4,000 4,000 Office expenses 16,000 16,000 Advertising 13,000 13,000 Transportation expense 10,400 10,400 General and administrative 3,000 3,000 Pension plans 2,000 2,000 Employee benefit programs 4,000 4,000 Miscellaneous 1,000 1,000 U.S. prod. act. ded. 0 6,169 6,169 Federal income taxes 14,000 14,000 0 Net income/Taxable income

before spec. deds. 63,412 339 63,073(e)

Total $893,158 $893,158 $24,645 $24,645 $875,158 $875,158

(a) MACRS depreciation 5 $27,476 total 2 $15,000 included in COGS 5 $12,476(b) Charitable contribution deduction limitation:

Total income (Form 1120, page 1, line 11) $303,612Minus: Deductions other than char. cont., DRD, & U.S. prod. act. ded. (226,676)Charitable contribution base $ 76,936Times: 10% 0.10Charitable contribution deduction $ 7,694

(c) $8,000 3 0.50 disallowance rate 5 $4,000 disallowed expenses(d) Total income (Form 1120, page 1, line 11) $303,612

Minus: Deductions other than the U.S. prod. act. ded. (235,070)Taxable income before the U.S. prod. act. ded. $ 68,542Times: 9% 0.09U.S. prod. act. ded. $ 6,169

(e) Taxable income:Taxable income before spec. deds. $ 63,073Minus: Div. rec. ded. ($1,000 3 0.70) (700)Taxable income $ 62,373



Form 7004(Rev. December 2016) Department of the Treasury Internal Revenue Service

Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns

File a separate application for each return. Information about Form 7004 and its separate instructions is at www.irs.gov/form7004.

OMB No. 1545-0233

Print or Type

Name Identifying number

Number, street, and room or suite no. (If P.O. box, see instructions.)

City, town, state, and ZIP code (If a foreign address, enter city, province or state, and country (follow the country’s practice for entering postal code)).

Note: File request for extension by the due date of the return for which the extension is granted. See instructions before completing this form.

Part I Automatic Extension for C Corporations With Tax Years Ending December 31. See instructions.1a Enter the form code for the return listed below that this application is for . . . . . . . . . . . . . . .

Application Is For:

Form Code

Form 1120 12Form 1120-C 34Form 1120-F 15Form 1120-FSC 16Form 1120-H 17Form 1120-L 18Form 1120-ND 19

Application Is For:

Form Code

Form 1120-ND (section 4951 taxes) 20Form 1120-PC 21Form 1120-POL 22Form 1120-REIT 23Form 1120-RIC 24Form 1120-SF 26

Part II Automatic Extension for Certain Estates and Trusts. See instructions.b Enter the form code for the return listed below that this application is for . . . . . . . . . . . . . . .

Application Is For:

Form Code

Form 1041 (estate other than a bankruptcy estate) 04

Application Is For:

Form Code

Form 1041 (trust) 05Part III Automatic Extension for Entities Not Using Part I, II, or IV. See instructions.

c Enter the form code for the return listed below that this application is for . . . . . . . . . . . . . . .Application Is For:

Form Code

Form 706-GS(D) 01 Form 706-GS(T) 02 Form 1041 (bankruptcy estate only) 03Form 1041-N 06Form 1041-QFT 07 Form 1042 08Form 1065 09Form 1065-B 10Form 1066 11Form 1120 12Form 1120-C 34Form 1120-F 15Form 1120-FSC 16Form 1120-H 17Form 1120-L 18Form 1120-ND 19

Application Is For:

Form Code

Form 1120-ND (section 4951 taxes) 20Form 1120-PC 21Form 1120-POL 22Form 1120-REIT 23Form 1120-RIC 24Form 1120S 25Form 1120-SF 26Form 3520-A 27Form 8612 28Form 8613 29Form 8725 30Form 8804 31Form 8831 32Form 8876 33Form 8924 35Form 8928 36

Part IV Automatic Extension for C Corporations With Tax Years Ending June 30. See instructions.d Enter the form code for the return listed below that this application is for . . . . . . . . . . . . . . .

Application Is For:

Form Code

Form 1120 12Form 1120-C 34Form 1120-F 15Form 1120-FSC 16Form 1120-H 17Form 1120-L 18Form 1120-ND 19

Application Is For:

Form Code

Form 1120-ND (section 4951 taxes) 20Form 1120-PC 21Form 1120-POL 22Form 1120-REIT 23Form 1120-RIC 24Form 1120-SF 26

For Privacy Act and Paperwork Reduction Act Notice, see separate instructions. Cat. No. 13804A Form 7004 (Rev. 12-2016)

Palmer Corporation

222 Sixth Avenue

City, ST 55555

XX-XXXXXXX



Form 7004 (Rev. 12-2016) Page 2 Part V All Filers Must Complete This Part

2 If the organization is a foreign corporation that does not have an o�ce or place of business in the United States, check here . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3 If the organization is a corporation and is the common parent of a group that intends to file a consolidated return, check here . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .If checked, attach a statement listing the name, address, and Employer Identification Number (EIN) for each member covered by this application.

4 If the organization is a corporation or partnership that qualifies under Regulations section 1.6081-5, check here .5a The application is for calendar year 20 , or tax year beginning , 20 , and ending , 20

b Short tax year. If this tax year is less than 12 months, check the reason: Initial return Final return Change in accounting period Consolidated return to be filed Other (see instructions—attach explanation)

6 Tentative total tax . . . . . . . . . . . . . . . . . . . . . . . . . . 6

7 Total payments and credits (see instructions) . . . . . . . . . . . . . . . . . 7

8 Balance due. Subtract line 7 from line 6 (see instructions) . . . . . . . . . . . . . 8 Form 7004 (Rev. 12-2016)

See text Example C:3-50 for the tax form facts.

17Sept. 3016Oct. 1

72,000

68,000

4,000



Globe Corporation XX-XXXXXXX

100,000

100,000

125,000

100,000

12-15-16

25,000

35,000

-0-

35,00022,00013,000

12,000

9-15-16

25,000

21,000

-0-

21,00018,0003,000

22,000

6-15-16

25,000

16,000

-0-

16,0009,0007,000-0- -0-

18,000

4-15-16

25,000

16,000

16,000

9,000

See text Example C:3-48 for tax form facts.


Underpayment of Estimated Tax by CorporationsAttach to the corporation’s tax return.


OMB No. 1545-0123

16Name Employer identification number

Note: Generally, the corporation isn't required to file Form 2220 (see Part II below for exceptions) because the IRS will figure any penalty owed and bill the corporation. However, the corporation may still use Form 2220 to figure the penalty. If so, enter the amount from page 2, line 38 on the estimated tax penalty line of the corporation’s income tax return, but do not attach Form 2220.

Part I Required Annual Payment

1 Total tax (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . 12a Personal holding company tax (Schedule PH (Form 1120), line 26) included on line 1 2ab Look-back interest included on line 1 under section 460(b)(2) for completed long-term

contracts or section 167(g) for depreciation under the income forecast method . . 2bc Credit for federal tax paid on fuels (see instructions) . . . . . . . . . . 2cd Total. Add lines 2a through 2c . . . . . . . . . . . . . . . . . . . . . . . . 2d

3 Subtract line 2d from line 1. If the result is less than $500, do not complete or file this form. The corporation doesn't owe the penalty . . . . . . . . . . . . . . . . . . . . . . . . . 3

4 Enter the tax shown on the corporation’s 2015 income tax return. See instructions. Caution: If the tax is zero or the tax year was for less than 12 months, skip this line and enter the amount from line 3 on line 5 . . 4

5 Required annual payment. Enter the smaller of line 3 or line 4. If the corporation is required to skip line 4, enterthe amount from line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Part II Reasons for Filing—Check the boxes below that apply. If any boxes are checked, the corporation must file Form 2220 even if it doesn't owe a penalty. See instructions.

6 The corporation is using the adjusted seasonal installment method.

7 The corporation is using the annualized income installment method.

8 The corporation is a “large corporation” figuring its first required installment based on the prior year's tax.

Part III Figuring the Underpayment(a) (b) (c) (d)

9 Installment due dates. Enter in columns (a) through (d) the 15th day of the 4th (Form 990-PF filers: Use 5th month), 6th, 9th, and 12th months of the corporation’s tax year . . . . . . . . . . 9

10 Required installments. If the box on line 6 and/or line 7 above is checked, enter the amounts from Schedule A, line 38. If the box on line 8 (but not 6 or 7) is checked, see instructions for the amounts to enter. If none of these boxes are checked, enter 25% (0.25) of line 5 above in each column . . . . . . . . . . . . . . . 10

11 Estimated tax paid or credited for each period. For column (a) only, enter the amount from line 11 on line 15. See instructions. . . . . 11

Complete lines 12 through 18 of one column before going to the next column.

12 Enter amount, if any, from line 18 of the preceding column . . . . 1213 Add lines 11 and 12 . . . . . . . . . . . . . . . 1314 Add amounts on lines 16 and 17 of the preceding column . . . . . . 1415 Subtract line 14 from line 13. If zero or less, enter -0- . . . . . . . 1516 If the amount on line 15 is zero, subtract line 13 from line 14.

Otherwise, enter -0- . . . . . . . . . . . . . . . 16

17 Underpayment. If line 15 is less than or equal to line 10, subtract line 15 from line 10. Then go to line 12 of the next column. Otherwise, go to line 18 . . . . . . . . . . . . . . . . . . 17

18 Overpayment. If line 10 is less than line 15, subtract line 10 from line 15. Then go to line 12 of the next column . . . . . . . . . 18

Go to Part IV on page 2 to figure the penalty. Do not go to Part IV if there are no entries on line 17—no penalty is owed.

For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11746L Form 2220 (2016)



6-15-16

61

61

60

92

15

30

60 181

91

77 15

151 36

76

183

121

21

16

90

11815

20

159

619

219

9-15-16 12-15-16 4-15-17

Form 2220 (2016) Page 2 Part IV Figuring the Penalty

(a) (b) (c) (d) 19

Enter the date of payment or the 15th day of the 4th month after the close of the tax year, whichever is earlier. (C Corporations withtax years ending June 30 and S corporations: Use 3rd monthinstead of 4th month.

4th month.) See instructions .. . . . . . 19

20 Number of days from due date of installment on line 9 to the date shown on line 19 . . . . . . . . . . . . . . . 20

21 Number of days on line 20 after 4/15/2016 and before 7/1/2016 21

22 Underpayment on line 17 × Number of days on line 21

366 × 4% (0.04) 22 $ $ $ $



366 × 4% (0.04) 24 $ $ $ $


26 Underpayment on line 17 ×Number of days on line 25

366 × 4% (0.04) 26 $ $ $ $



365 × 4% (0.04) 28 $ $ $ $



365 × *% 30 $ $ $ $



365 × *% 32 $ $ $ $



365 × *% 34 $ $ $ $



365 × *% 36 $ $ $ $

37 Add lines 22, 24, 26, 28, 30, 32, 34, and 36 . . . . . . . 37 $ $ $ $

38 Penalty. Add columns (a) through (d) of line 37. Enter the total here and on Form 1120, line 33; or the comparable line for other income tax returns . . . . . . . . . . . . . . . . . . . . . . . . . 38 $

*Use the penalty interest rate for each calendar quarter, which the IRS will determine during the first month in the preceding quarter. These rates are published quarterly in an IRS News Release and in a revenue ruling in the Internal Revenue Bulletin. To obtain this information on the Internet, access the IRS website at www.irs.gov. You can also call 1-800-829-4933 to get interest rate information.

Form 2220 (2016)

*The rate for the first quarter of 2017 is 4%.

Form 990-PF and Form 990-T filers: Use 5thinstead of month



SCHEDULE M-3 (Form 1120)


Net Income (Loss) Reconciliation for Corporations With Total Assets of $10 Million or More

Attach to Form 1120 or 1120-C. Information about Schedule M-3 (Form 1120) and its separate instructions is available at www.irs.gov/form1120.

OMB No. 1545-0123

16Name of corporation (common parent, if consolidated return) Employer identification number

Check applicable box(es): (1) Non-consolidated return (2) Consolidated return (Form 1120 only)

(3) Mixed 1120/L/PC group (4) Dormant subsidiaries schedule attached

Part I Financial Information and Net Income (Loss) Reconciliation (see instructions)

1 a Did the corporation file SEC Form 10-K for its income statement period ending with or within this tax year?Yes. Skip lines 1b and 1c and complete lines 2a through 11 with respect to that SEC Form 10-K.No. Go to line 1b. See instructions if multiple non-tax-basis income statements are prepared.

b Did the corporation prepare a certified audited non-tax-basis income statement for that period?Yes. Skip line 1c and complete lines 2a through 11 with respect to that income statement.No. Go to line 1c.

c Did the corporation prepare a non-tax-basis income statement for that period?Yes. Complete lines 2a through 11 with respect to that income statement.No. Skip lines 2a through 3c and enter the corporation’s net income (loss) per its books and records on line 4a.

2 a Enter the income statement period: Beginning Endingb Has the corporation’s income statement been restated for the income statement period on line 2a?

Yes. (If “Yes,” attach an explanation and the amount of each item restated.)No.

c Has the corporation’s income statement been restated for any of the five income statement periods immediatelypreceding the period on line 2a?

Yes. (If “Yes,” attach an explanation and the amount of each item restated.)No.

3 a Is any of the corporation’s voting common stock publicly traded?Yes.No. If “No,” go to line 4a.

b Enter the symbol of the corporation’s primary U.S. publicly traded voting commonstock . . . . . . . . . . . . . . . . . . . . . . . . . .

c Enter the nine-digit CUSIP number of the corporation’s primary publicly traded voting common stock . . . . . . . . . . . . . . . . . . . . . . .

4 a Worldwide consolidated net income (loss) from income statement source identified in Part I, line 1 . 4a b Indicate accounting standard used for line 4a (see instructions):

(1) GAAP (2) IFRS (3) Statutory (4) Tax-basis (5) Other (specify)5 a Net income from nonincludible foreign entities (attach statement) . . . . . . . . . . . . 5a ( )b Net loss from nonincludible foreign entities (attach statement and enter as a positive amount) . . . 5b

6 a Net income from nonincludible U.S. entities (attach statement) . . . . . . . . . . . . . 6a ( )b Net loss from nonincludible U.S. entities (attach statement and enter as a positive amount) . . . . 6b

7 a Net income (loss) of other includible foreign disregarded entities (attach statement) . . . . . . 7a b Net income (loss) of other includible U.S. disregarded entities (attach statement) . . . . . . . 7bc Net income (loss) of other includible entities (attach statement) . . . . . . . . . . . . . 7c

8 Adjustment to eliminations of transactions between includible entities and nonincludible entities (attachstatement) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

9 Adjustment to reconcile income statement period to tax year (attach statement) . . . . . . . 9 10a Intercompany dividend adjustments to reconcile to line 11 (attach statement) . . . . . . . . 10a

b Other statutory accounting adjustments to reconcile to line 11 (attach statement) . . . . . . . 10bc Other adjustments to reconcile to amount on line 11 (attach statement) . . . . . . . . . . 10c

11 Net income (loss) per income statement of includible corporations. Combine lines 4 through 10 . 11 Note: Part I, line 11, must equal Part II, line 30, column (a) or Schedule M-1, line 1 (see instructions).

12 Enter the total amount (not just the corporation’s share) of the assets and liabilities of all entities included or removed on thefollowing lines. Total Assets Total Liabilities

a Included on Part I, line 4 . . . . . . .b Removed on Part I, line 5 . . . . . . .c Removed on Part I, line 6 . . . . . . .d Included on Part I, line 7 . . . . . . .

For Paperwork Reduction Act Notice, see the Instructions for Form 1120. Cat. No. 37961C Schedule M-3 (Form 1120) 2016

Valley Corporation XX-XXXXXXX

372,000

372,000

2,306,980*

*For this information, see Comprehensive Example, Year 1, Step 11 on text page C:3-50.See text Example C:3-51 for tax form facts.

1,320,420

1/1/16 12/31/16

X

X

X

X

X

X

X

X




Prepaid rent -0-

3,000

550,000 550,000

*

10,000

(3,000) -0-

10,000

8,000

12,000

(532,000)(296,000)

1,200,000

372,000125,440(90,000)336,560

1,200,000

(549,000)(314,440) (110,000)

20,000128,440

372,000336,560 (90,000) 125,440

(3,000)

8,000

(12,000)

**

*Tax-exempt interest $3,000**Sales $1,500,000 minus operating expenses $300,000

Schedule M-3 (Form 1120) 2016 Page 2 Name of corporation (common parent, if consolidated return) Employer identification number

Check applicable box(es): (1) Consolidated group (2) Parent corp (3) Consolidated eliminations (4) Subsidiary corp (5) Mixed 1120/L/PC group

Check if a sub-consolidated: (6) 1120 group (7) 1120 eliminations

Name of subsidiary (if consolidated return) Employer identification number

Part II Reconciliation of Net Income (Loss) per Income Statement of Includible Corporations With Taxable Income per Return (see instructions)

( ) ( )

Income (Loss) Items (Attach statements for lines 1 through 12)

(a) Income (Loss) per Income Statement

(b) Temporary Di�erence

(c) Permanent Di�erence

(d) Income (Loss) per Tax Return

1 Income (loss) from equity method foreign corporations2 Gross foreign dividends not previously taxed . . . 3 Subpart F, QEF, and similar income inclusions . .4 Section 78 gross-up . . . . . . . . . . .5 Gross foreign distributions previously taxed . . .6 Income (loss) from equity method U.S. corporations 7 U.S. dividends not eliminated in tax consolidation 8 Minority interest for includible corporations . . .9 Income (loss) from U.S. partnerships . . . . .

10 Income (loss) from foreign partnerships . . . .11 Income (loss) from other pass-through entities . .12 Items relating to reportable transactions . . . .

13 Interest income (see instructions) ... . . . .14 Total accrual to cash adjustment . . . . . . .15 Hedging transactions . . . . . . . . . .16 Mark-to-market income (loss) . . . . . . . .17 Cost of goods sold (see instructions) . .. . . .18 Sale versus lease (for sellers and/or lessors) . . .

19 Section 481(a) adjustments . . . . . . . . 20 Unearned/deferred revenue . . . . . . . .21 Income recognition from long-term contracts . .22 Original issue discount and other imputed interest . 23a

Income statement gain/loss on sale, exchange, abandonment, worthlessness, or other disposition of assets other than inventory and pass-through entities

b Gross capital gains from Schedule D, excluding amounts from pass-through entities . . . . .

c

Gross capital losses from Schedule D, excluding amounts from pass-through entities, abandonment losses, and worthless stock losses . . . . .

d

Net gain/loss reported on Form 4797, line 17, excluding amounts from pass-through entities, abandonment losses, and worthless stock losses

e Abandonment losses . . . . . . . . . .f Worthless stock losses (attach statement) . . . .g Other gain/loss on disposition of assets other than inventory

24 Capital loss limitation and carryforward used . . .25 Other income (loss) items with di�erences (attach statement)

26 Total income (loss) items. Combine lines 1 through 25 27 Total expense/deduction items (from Part III, line 38) 28 Other items with no di�erences . . . . . . .29a Mixed groups, see instructions. All others, combine

lines 26 through 28 . . . . . . . . . .

b PC insurance subgroup reconciliation totals . . .c Life insurance subgroup reconciliation totals . . .

30 Reconciliation totals. Combine lines 29a through 29c Note: Line 30, column (a), must equal Part I, line 11, and column (d) must equal Form 1120, page 1, line 28.

Schedule M-3 (Form 1120) 2016




**

124,10027,540

75,000

60,00025,0002,800

314,440

(124,100)(27,540)

35,000

(9,000)(2,800)

(128,440)

110,000

110,000

-0-

35,000

170,00016,000

296,000

75,000

*$151,640 FIT per books – $124,100 FIT liability (current income tax expense) = $27,540 deferredincome tax expense. Also see Comprehensive Problem, Year 1, Step 7 on text pages C:3-48 and C:3-49.**Business interest

**

Schedule M-3 (Form 1120) 2016 Page 3 Name of corporation (common parent, if consolidated return) Employer identification number

Check applicable box(es): (1) Consolidated group (2) Parent corp (3) Consolidated eliminations (4) Subsidiary corp (5) Mixed 1120/L/PC group

Check if a sub-consolidated: (6) 1120 group (7) 1120 eliminations

Name of subsidiary (if consolidated return) Employer identification number

Part III Reconciliation of Net Income (Loss) per Income Statement of Includible Corporations With Taxable Income per Return—Expense/Deduction Items (see instructions)

Expense/Deduction Items

(a) Expense per

Income Statement

(b) Temporary Di�erence

(c) Permanent Di�erence

(d) Deduction per

Tax Return

1 U.S. current income tax expense . . . . . . .2 U.S. deferred income tax expense . . . . . .3 State and local current income tax expense . . .4 State and local deferred income tax expense . . .5 Foreign current income tax expense (other than

foreign withholding taxes) . . . . . . . .

6 Foreign deferred income tax expense . . . . .7 Foreign withholding taxes . . . . . . . . .8 Interest expense (see instructions) . . . . . . .9 Stock option expense . . . . . . . . . .

10 Other equity-based compensation . . . . . . 11 Meals and entertainment . . . . . . . . . 12 Fines and penalties . . . . . . . . . . . 13 Judgments, damages, awards, and similar costs . 14 Parachute payments . . . . . . . . . . . 15 Compensation with section 162(m) limitation . . .16 Pension and profit-sharing . . . . . . . . . 17 Other post-retirement benefits . . . . . . . 18 Deferred compensation . . . . . . . . . . 19 Charitable contribution of cash and tangible

property . . . . . . . . . . . . . . .

20 Charitable contribution of intangible property . . 21 Charitable contribution limitation/carryforward . . 22 Domestic production activities deduction . . . .23 Current year acquisition or reorganization

investment banking fees . . . . . . . .24 Current year acquisition or reorganization legal and

accounting fees . . . . . . . . . . .

25 Current year acquisition/reorganization other costs . 26 Amortization/impairment of goodwill . . . . .27 Amortization of acquisition, reorganization, and

start-up costs . . . . . . . . . . . .

28 Other amortization or impairment write-o�s . . . 29 Reserved . . . . . . . . . . . . . . 30 Depletion . . . . . . . . . . . . . . 31 Depreciation . . . . . . . . . . . . . 32 Bad debt expense . . . . . . . . . . . 33 Corporate owned life insurance premiums . . .34 Purchase versus lease (for purchasers and/or

lessees) . . . . . . . . . . . . . .

35 Research and development costs . . . . . . 36 Section 118 exclusion (attach statement) . . . . 37 Other expense/deduction items with di�erences

(attach statement) . . . . . . . . . .

38

Total expense/deduction items. Combine lines 1 through 37. Enter here and on Part II, line 27, reporting positive amounts as negative and negative amounts as positive . . . . . . .

Schedule M-3 (Form 1120) 2016



Glidden Corporation XX-XXXXXXX

130,278

7,500

(6,918)

130,860

136,125

266,985

266,985

10,754256,23151,246

51,24634,05817,188

-0-

-0-

312,360

181,500136,125

311,296

116,98529,246

See the Comprehensive Example on text page C:5-10 for tax form facts.


Alternative Minimum Tax—CorporationsAttach to the corporation's tax return.


OMB No. 1545-0123

16Name Employer identification number

Note: See the instructions to find out if the corporation is a small corporation exempt from thealternative minimum tax (AMT) under section 55(e).

1 Taxable income or (loss) before net operating loss deduction . . . . . . . . . . . . . . 1

2 Adjustments and preferences:a Depreciation of post-1986 property . . . . . . . . . . . . . . . . . . . . . . 2a b Amortization of certified pollution control facilities. . . . . . . . . . . . . . . . . . 2bc Amortization of mining exploration and development costs . . . . . . . . . . . . . . 2c d Amortization of circulation expenditures (personal holding companies only) . . . . . . . . . 2de Adjusted gain or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . 2e f Long-term contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . 2f g Merchant marine capital construction funds. . . . . . . . . . . . . . . . . . . . 2gh Section 833(b) deduction (Blue Cross, Blue Shield, and similar type organizations only) . . . . . 2h i Tax shelter farm activities (personal service corporations only) . . . . . . . . . . . . . 2i j Passive activities (closely held corporations and personal service corporations only) . . . . . . 2j k Loss limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2k l Depletion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2l m Tax-exempt interest income from specified private activity bonds . . . . . . . . . . . . 2mn Intangible drilling costs . . . . . . . . . . . . . . . . . . . . . . . . . . 2no Other adjustments and preferences . . . . . . . . . . . . . . . . . . . . . . 2o

3 Pre-adjustment alternative minimum taxable income (AMTI). Combine lines 1 through 2o . . . . . 3

4 Adjusted current earnings (ACE) adjustment:a ACE from line 10 of the ACE worksheet in the instructions . . . . . . . . 4a b Subtract line 3 from line 4a. If line 3 exceeds line 4a, enter the di�erence as a

negative amount. See instructions . . . . . . . . . . . . . . . . 4bc Multiply line 4b by 75% (0.75). Enter the result as a positive amount. . . . . 4c

d Enter the excess, if any, of the corporation’s total increases in AMTI from prior year ACE adjustments over its total reductions in AMTI from prior year ACEadjustments. See instructions. Note: You must enter an amount on line 4d (even if line 4b is positive) . . . . . . . . . . . . . . . . . . . 4d

e ACE adjustment.• If line 4b is zero or more, enter the amount from line 4c . . .• If line 4b is less than zero, enter the smaller of line 4c or line 4d as a negative amount } 4e

5 Combine lines 3 and 4e. If zero or less, stop here; the corporation does not owe any AMT . . . . 5 6 Alternative tax net operating loss deduction. See instructions . . . . . . . . . . . . . . 6 7 Alternative minimum taxable income. Subtract line 6 from line 5. If the corporation held a residual

interest in a REMIC, see instructions . . . . . . . . . . . . . . . . . . . . . . 7 8 Exemption phase-out (if line 7 is $310,000 or more, skip lines 8a and 8b and enter -0- on line 8c):a Subtract $150,000 from line 7 (if completing this line for a member of a

controlled group, see instructions). If zero or less, enter -0- . . . . . . . 8a b Multiply line 8a by 25% (0.25) .. . . . . . . . . . . . . . . . . 8bc Exemption. Subtract line 8b from $40,000 (if completing this line for a member of a controlled group,

see instructions). If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . 8c 9 Subtract line 8c from line 7. If zero or less, enter -0- . . . . . . . . . . . . . . . . . 9

10 Multiply line 9 by 20% (0.20) . . . . . . . . . . . . . . . . . . . . . . . . . 10 11 Alternative minimum tax foreign tax credit (AMTFTC). See instructions . . . . . . . . . . . 11 12 Tentative minimum tax. Subtract line 11 from line 10 . . . . . . . . . . . . . . . . . 12 13 Regular tax liability before applying all credits except the foreign tax credit . . . . . . . . . 13 14 Alternative minimum tax. Subtract line 13 from line 12. If zero or less, enter -0-. Enter here and on

Form 1120, Schedule J, line 3, or the appropriate line of the corporation’s income tax return . . . 14For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 12955I Form 4626 (2016)



Alpha Manufacturing Corp. and Subsidiaries

City, ST 55555

800 Tenth Place

XX-XXXXXXX

9/15/2006

3,976,492

6,121,0002,275,0003,846,000

40,000156,000195,000

67,93948,76010,000

4,363,699165,000

1,356,00083,00048,500

179,000138,00058,00015,000

168,693

269,140140,000105,000

29,0131,284,0004,038,346

325,353

32,000293,35397,658

100,000

2,342

6,121,000-0-

2222 Fifth Street, City, ST 55555Prepper and Associates

John A. Prepper

President

32,000

2,342

4-14-17

4-14-17 X

X

See text Example C:8-50 and the worksheet on appendix pages B-26 and B-27 for tax form facts.


U.S. Corporation Income Tax ReturnFor calendar year 2016 or tax year beginning , 2016, ending , 20


OMB No. 1545-0123

16

TYPE OR PRINT

Name


City or town, state, or province, country and ZIP or foreign postal code

A Check if:1a Consolidated return

(attach Form 851) . b Life/nonlife consoli-

dated return . . .2 Personal holding co.

(attach Sch. PH) . .3 Personal service corp.

(see instructions) . .4 Schedule M-3 attached

B Employer identification number

C Date incorporated

D Total assets (see instructions)

$E Check if: (1) Initial return (2) Final return (3) Name change (4) Address change

Inco

me

1a Gross receipts or sales . . . . . . . . . . . . . . . . . 1ab Returns and allowances . . . . . . . . . . . . . . . . . 1bc Balance. Subtract line 1b from line 1a . . . . . . . . . . . . . . . . . . . . . 1c

2 Cost of goods sold (attach Form 1125-A) . . . . . . . . . . . . . . . . . . . . 23 Gross profit. Subtract line 2 from line 1c . . . . . . . . . . . . . . . . . . . . 34 Dividends (Schedule C, line 19) . . . . . . . . . . . . . . . . . . . . . . 45 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Gross rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Gross royalties . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Capital gain net income (attach Schedule D (Form 1120)) . . . . . . . . . . . . . . . 89 Net gain or (loss) from Form 4797, Part II, line 17 (attach Form 4797) . . . . . . . . . . . 9

10 Other income (see instructions—attach statement) . . . . . . . . . . . . . . . . . 1011 Total income. Add lines 3 through 10 . . . . . . . . . . . . . . . . . . . . . 11

Ded

uctio

ns (S

ee in

stru

ctio

ns f

or

limita

tions

on

ded

uctio

ns.) 12 Compensation of o�cers (see instructions—attach Form 1125-E) . . . . . . . . . . . . 12

13 Salaries and wages (less employment credits) . . . . . . . . . . . . . . . . . . 1314 Repairs and maintenance . . . . . . . . . . . . . . . . . . . . . . . . 1415 Bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1516 Rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1617 Taxes and licenses . . . . . . . . . . . . . . . . . . . . . . . . . . 1718 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1819 Charitable contributions . . . . . . . . . . . . . . . . . . . . . . . . . 1920 Depreciation from Form 4562 not claimed on Form 1125-A or elsewhere on return (attach Form 4562) . . 2021 Depletion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2122 Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2223 Pension, profit-sharing, etc., plans . . . . . . . . . . . . . . . . . . . . . 2324 Employee benefit programs . . . . . . . . . . . . . . . . . . . . . . . 2425 Domestic production activities deduction (attach Form 8903) . . . . . . . . . . . . . . 2526 Other deductions (attach statement) . . . . . . . . . . . . . . . . . . . . . 2627 Total deductions. Add lines 12 through 26 . . . . . . . . . . . . . . . . . . . 2728 Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line 11. 2829a Net operating loss deduction (see instructions) . . . . . . . . . . 29a

b Special deductions (Schedule C, line 20) . . . . . . . . . . . . 29bc Add lines 29a and 29b . . . . . . . . . . . . . . . . . . . . . . . . . 29c

Tax,

Ref

unda

ble

Cre

dits

, and

P

aym

ents

30 Taxable income. Subtract line 29c from line 28. See instructions . . . . . . . . . . . . 3031 Total tax (Schedule J, Part I, line 11) . . . . . . . . . . . . . . . . . . . . . 3132 Total payments and refundable credits (Schedule J, Part II, line 21) . . . . . . . . . . . . 3233 Estimated tax penalty. See instructions. Check if Form 2220 is attached . . . . . . . . 3334 Amount owed. If line 32 is smaller than the total of lines 31 and 33, enter amount owed . . . . . 3435 Overpayment. If line 32 is larger than the total of lines 31 and 33, enter amount overpaid . . . . . 3536 Enter amount from line 35 you want: Credited to 2017 estimated tax Refunded 36

Sign Here



May the IRS discuss this return with the preparer shown below?See instructions. Yes No



PTIN



For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11450Q Form 1120 (2016)


B-26 Corporations ▶ Appendix BFo

rm 1

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inco

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Facts for General Partnership (Form 1065)

The same basic facts presented for the Andrew Lawrence proprietorship are used for the partnership except for the following:

1. Johns and Lawrence is instead a general partnership. Andrew Lawrence and Stephen Johns are both general partners and have equal capital and profits interests. The partners formed the partnership on June 1, 2010. Johns and Lawrence each exchanged their $100,000 of property for a 50% interest in capital and profits.

2. The book income for Johns and Lawrence is presented in the attached worksheet, which reconciles book income and partnership taxable income.

3. The $18,000 salaries paid to each partner are stipulated in the partnership agreement and are treated as guaranteed payments.

4. The partnership pays federal and state employment taxes on the wages paid to employees other than the partners Johns and Lawrence. The employment tax expense is $52,000 3 0.16 = $8,320. The guaranteed payments made to Johns and Lawrence are treated as self-employment income by the two partners.

5. The partnership paid no estimated federal income taxes.

6. The partnership distributed $14,106 to each of the two partners.


Travel $ 4,000Meals and entertainment 8,000Minus: 50% disallowance (4,000)Office expenses 16,000Transportation 10,400General and administrative 3,000Advertising 13,000Miscellaneous* 850Total $51,250

*$150 of the miscellaneous expenses are related to the production of the dividend income and are sepa-rately stated.

8. The following schedule reconciles net income for the C corporation and the partnership:

Net income per books for C corporation $63,412Plus: Federal income taxes

Employment tax adjustment ($14,480 2 $8,320)14,0006,160

Net income per books for partnership $83,572

9. Total paid-in capital and accumulated profits were divided equally between the two part-ners in accordance with the actual contributions and allocation of partnership profits in the partnership agreement. Actual business operations may provide for an unequal allocation.


11. The balance sheet for Johns and Lawrence appears on page 4 of Form 1065.

12. For additional information, see the worksheet on page B-37.



Michael S. Prepper


U.S. Return of Partnership Income For calendar year 2016, or tax year beginning , 2016, ending , 20 .


OMB No. 1545-0123

16

Type or

Print

Name of partnership

Number, street, and room or suite no. If a P.O. box, see the instructions.

City or town, state or province, country, and ZIP or foreign postal code

A Principal business activity

B Principal product or service

C Business code number

D Employer identification number

E Date business started

F Total assets (see the instructions)

$

G Check applicable boxes: (1) Initial return (2) Final return (3) Name change (4) Address change (5) Amended return

(6) Technical termination - also check (1) or (2) H Check accounting method: (1) Cash (2) Accrual (3) Other (specify)

I Number of Schedules K-1. Attach one for each person who was a partner at any time during the tax year

J Check if Schedules C and M-3 are attached . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Caution. Include only trade or business income and expenses on lines 1a through 22 below. See the instructions for more information.

Inco

me

1a Gross receipts or sales . . . . . . . . . . . . . 1a b Returns and allowances . . . . . . . . . . . . 1b c Balance. Subtract line 1b from line 1a . . . . . . . . . . . . . . . . . . 1c

2 Cost of goods sold (attach Form 1125-A) . . . . . . . . . . . . . . . . 2 3 Gross profit. Subtract line 2 from line 1c . . . . . . . . . . . . . . . . . 3 4 Ordinary income (loss) from other partnerships, estates, and trusts (attach statement) . . 4 5 Net farm profit (loss) (attach Schedule F (Form 1040)) . . . . . . . . . . . . 5 6 Net gain (loss) from Form 4797, Part II, line 17 (attach Form 4797) . . . . . . . . 6 7 Other income (loss) (attach statement) . . . . . . . . . . . . . . . . . 7 8 Total income (loss). Combine lines 3 through 7 . . . . . . . . . . . . . . 8

Ded

uctio

ns

(see

the

inst

ruct

ions

for

limita

tions

) 9 Salaries and wages (other than to partners) (less employment credits) . . . . . . . 9 10 Guaranteed payments to partners . . . . . . . . . . . . . . . . . . . 10 11 Repairs and maintenance . . . . . . . . . . . . . . . . . . . . . . 11 12 Bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 13 Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 14 Taxes and licenses . . . . . . . . . . . . . . . . . . . . . . . . 14 15 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 16a Depreciation (if required, attach Form 4562) . . . . . . 16a

b Less depreciation reported on Form 1125-A and elsewhere on return 16b 16c17 Depletion (Do not deduct oil and gas depletion.) . . . . . . . . . . . . . 17 18 Retirement plans, etc. . . . . . . . . . . . . . . . . . . . . . . . 18 19 Employee benefit programs . . . . . . . . . . . . . . . . . . . . . 19 20 Other deductions (attach statement) . . . . . . . . . . . . . . . . . . 20 21 Total deductions. Add the amounts shown in the far right column for lines 9 through 20 . 21 22 Ordinary business income (loss). Subtract line 21 from line 8 . . . . . . . . . 22

Sign Here

Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than general partner or limited liability company member manager) is based on all information of which preparer has any knowledge.

May the IRS discuss this return with the preparer shown below (see instructions)? Yes No

Signature of general partner or limited liability company member manager Date


Print/Type preparer’s name Preparer’s signature DateCheck if self-employed

PTIN

Firm’s name

Firm’s address

Firm's EIN

Phone no.

For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11390Z Form 1065 (2016)



*Schedule B-1 is not attached. If attached, it would list Stephen Johns and Andrew Lawrence, each of whom own a 50% interest in the partnership.

X

X

X*

X

X

X

XX

X

X

X

X

X

Form 1065 (2016) Page 2 Schedule B Other Information 1 What type of entity is filing this return? Check the applicable box: Yes No

a Domestic general partnership b Domestic limited partnership c Domestic limited liability company d Domestic limited liability partnership e Foreign partnership f Other

2 At any time during the tax year, was any partner in the partnership a disregarded entity, a partnership (including an entity treated as a partnership), a trust, an S corporation, an estate (other than an estate of a deceased partner), or a nominee or similar person? . . . . . . . . . . . . . . . . . . . . . . . . . . .

3 At the end of the tax year:

a Did any foreign or domestic corporation, partnership (including any entity treated as a partnership), trust, or tax-exempt organization, or any foreign government own, directly or indirectly, an interest of 50% or more in the profit, loss, or capital of the partnership? For rules of constructive ownership, see instructions. If “Yes,” attach ScheduleB-1, Information on Partners Owning 50% or More of the Partnership . . . . . . . . . . . . . . .

b Did any individual or estate own, directly or indirectly, an interest of 50% or more in the profit, loss, or capital ofthe partnership? For rules of constructive ownership, see instructions. If “Yes,” attach Schedule B-1, Informationon Partners Owning 50% or More of the Partnership . . . . . . . . . . . . . . . . . . . .

4 At the end of the tax year, did the partnership: a Own directly 20% or more, or own, directly or indirectly, 50% or more of the total voting power of all classes of

stock entitled to vote of any foreign or domestic corporation? For rules of constructive ownership, see instructions. If “Yes,” complete (i) through (iv) below . . . . . . . . . . . . . . . . . . . . .

(i) Name of Corporation (ii) Employer Identification Number (if any)

(iii) Country of Incorporation

(iv) Percentage Owned in Voting Stock

b Own directly an interest of 20% or more, or own, directly or indirectly, an interest of 50% or more in the profit, loss, or capital in any foreign or domestic partnership (including an entity treated as a partnership) or in the beneficial interest of a trust? For rules of constructive ownership, see instructions. If “Yes,” complete (i) through (v) below . .

(i) Name of Entity (ii) Employer Identification

Number (if any)

(iii) Type of Entity

(iv) Country of Organization

(v) Maximum Percentage Owned in Profit, Loss, or Capital

Yes No 5 Did the partnership file Form 8893, Election of Partnership Level Tax Treatment, or an election statement under

section 6231(a)(1)(B)(ii) for partnership-level tax treatment, that is in e�ect for this tax year? See Form 8893 for more details . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6 Does the partnership satisfy all four of the following conditions? a The partnership’s total receipts for the tax year were less than $250,000.b The partnership’s total assets at the end of the tax year were less than $1 million.c Schedules K-1 are filed with the return and furnished to the partners on or before the due date (including

extensions) for the partnership return.

d The partnership is not filing and is not required to file Schedule M-3 . . . . . . . . . . . . . . .If “Yes,” the partnership is not required to complete Schedules L, M-1, and M-2; Item F on page 1 of Form 1065; or Item L on Schedule K-1.

7 Is this partnership a publicly traded partnership as defined in section 469(k)(2)? . . . . . . . . . . . .8 During the tax year, did the partnership have any debt that was cancelled, was forgiven, or had the terms

modified so as to reduce the principal amount of the debt? . . . . . . . . . . . . . . . . . .

9 Has this partnership filed, or is it required to file, Form 8918, Material Advisor Disclosure Statement, to provide information on any reportable transaction? . . . . . . . . . . . . . . . . . . . . . . . .

10 At any time during calendar year 2016, did the partnership have an interest in or a signature or other authority over a financial account in a foreign country (such as a bank account, securities account, or other financial account)? See the instructions for exceptions and filing requirements for FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR). If “Yes,”enter the name of the foreign country.

Form 1065 (2016)



XX

X

X

X

X

X

XXX-XX-XXXXAndrew Lawrence

-0--0-

333 Third StreetCity, ST 55555

Form 1065 (2016) Page 3 Schedule B Other Information (continued)

Yes No 11 At any time during the tax year, did the partnership receive a distribution from, or was it the grantor of, or

transferor to, a foreign trust? If “Yes,” the partnership may have to file Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts. See instructions . . . . . . . . .

12a Is the partnership making, or had it previously made (and not revoked), a section 754 election? . . . . . .See instructions for details regarding a section 754 election.

b Did the partnership make for this tax year an optional basis adjustment under section 743(b) or 734(b)? If “Yes,” attach a statement showing the computation and allocation of the basis adjustment. See instructions . . . .

c Is the partnership required to adjust the basis of partnership assets under section 743(b) or 734(b) because of a substantial built-in loss (as defined under section 743(d)) or substantial basis reduction (as defined under section 734(d))? If “Yes,” attach a statement showing the computation and allocation of the basis adjustment. See instructions

13 Check this box if, during the current or prior tax year, the partnership distributed any property received in a like-kind exchange or contributed such property to another entity (other than disregarded entities whollyowned by the partnership throughout the tax year) . . . . . . . . . . . . . . . . . . .

14 At any time during the tax year, did the partnership distribute to any partner a tenancy-in-common or other undivided interest in partnership property? . . . . . . . . . . . . . . . . . . . . . . . .

15 If the partnership is required to file Form 8858, Information Return of U.S. Persons With Respect To Foreign Disregarded Entities, enter the number of Forms 8858 attached. See instructions

16 Does the partnership have any foreign partners? If “Yes,” enter the number of Forms 8805, Foreign Partner’s Information Statement of Section 1446 Withholding Tax, filed for this partnership.

17 Enter the number of Forms 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships, attached to this return.

18 a Did you make any payments in 2016 that would require you to file Form(s) 1099? See instructions . . . . .b If “Yes,” did you or will you file required Form(s) 1099? . . . . . . . . . . . . . . . . . . . .

19 Enter the number of Form(s) 5471, Information Return of U.S. Persons With Respect To Certain Foreign Corporations, attached to this return.

20 Enter the number of partners that are foreign governments under section 892. 21 During the partnership's tax year, did the partnership make any payments that would require it to file Form 1042

and 1042-S under chapter 3 (sections 1441 through 1464) or chapter 4 (sections 1471 through 1474)?22 Was the partnership a specified domestic entity required to file Form 8938 for the tax year (See the instructions for

Form 8938)?Designation of Tax Matters Partner (see instructions) Enter below the general partner or member-manager designated as the tax matters partner (TMP) for the tax year of this return:

Name of designated TMP

Identifying number of TMP

If the TMP is an entity, name of TMP representative

Phone number of TMP

Address of designated TMP

Form 1065 (2016)

X

X



1,000

*Disallowed meals and entertainment expenses ($4,000) plus interest on loan used to purchase tax-exempt bonds ($2,000).

**Investment income only if partners elect to tax dividends at ordinary rates under Sec. 163(d)(4)(B).

*

**

79,846

36,000

1,000

(2,100)4,500

12,000 150

115,846

300,212

1,514

18,000

6,000 28,212

1,000

Form 1065 (2016) Page 4 Schedule K Partners’ Distributive Share Items Total amount

Inco

me

(Lo

ss)

1 Ordinary business income (loss) (page 1, line 22) . . . . . . . . . . . . . 12 Net rental real estate income (loss) (attach Form 8825) . . . . . . . . . . . 2 3a Other gross rental income (loss) . . . . . . . . 3a b Expenses from other rental activities (attach statement) 3b c Other net rental income (loss). Subtract line 3b from line 3a . . . . . . . . . 3c

4 Guaranteed payments . . . . . . . . . . . . . . . . . . . . . 4 5 Interest income . . . . . . . . . . . . . . . . . . . . . . . . 5 6 Dividends: a Ordinary dividends . . . . . . . . . . . . . . . . . 6a

b Qualified dividends . . . . . . 6b 7 Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . 7 8 Net short-term capital gain (loss) (attach Schedule D (Form 1065)) . . . . . . . 8 9 a Net long-term capital gain (loss) (attach Schedule D (Form 1065)) . . . . . . . 9a b Collectibles (28%) gain (loss) . . . . . . . . . 9b c Unrecaptured section 1250 gain (attach statement) . . 9c

10 Net section 1231 gain (loss) (attach Form 4797) . . . . . . . . . . . . . 10 11 Other income (loss) (see instructions) Type 11

Ded

uctio

ns

12 Section 179 deduction (attach Form 4562) . . . . . . . . . . . . . . . 12 13a Contributions . . . . . . . . . . . . . . . . . . . . . . . . 13a

b Investment interest expense . . . . . . . . . . . . . . . . . . . 13b c Section 59(e)(2) expenditures: (1) Type (2) Amount 13c(2)

d Other deductions (see instructions) Type 13d

Self-

Em

ploy

- m

ent

14a Net earnings (loss) from self-employment . . . . . . . . . . . . . . . 14a b Gross farming or fishing income . . . . . . . . . . . . . . . . . . 14b c Gross nonfarm income . . . . . . . . . . . . . . . . . . . . . 14c

Cre

dits

15a Low-income housing credit (section 42(j)(5)) . . . . . . . . . . . . . . 15a b Low-income housing credit (other) . . . . . . . . . . . . . . . . . 15b c Qualified rehabilitation expenditures (rental real estate) (attach Form 3468, if applicable) 15c d Other rental real estate credits (see instructions) Type 15d e Other rental credits (see instructions) Type 15e f Other credits (see instructions) Type 15f

Fore

ign

Tra

nsac

tions

16a Name of country or U.S. possession b Gross income from all sources . . . . . . . . . . . . . . . . . . . 16b c Gross income sourced at partner level . . . . . . . . . . . . . . . . 16c

Foreign gross income sourced at partnership level d Passive category e General category f Other 16f

Deductions allocated and apportioned at partner level g Interest expense h Other . . . . . . . . . . 16h

Deductions allocated and apportioned at partnership level to foreign source income i Passive category j General category k Other 16k l Total foreign taxes (check one): Paid Accrued . . . . . . . . 16l m Reduction in taxes available for credit (attach statement) . . . . . . . . . . 16m n Other foreign tax information (attach statement) . . . . . . . . . . . . .

Alte

rnat

ive

M

inim

um T

ax

(AM

T) I

tem

s

17a Post-1986 depreciation adjustment . . . . . . . . . . . . . . . . . 17a b Adjusted gain or loss . . . . . . . . . . . . . . . . . . . . . . 17b c Depletion (other than oil and gas) . . . . . . . . . . . . . . . . . . 17c d Oil, gas, and geothermal properties—gross income . . . . . . . . . . . . 17d e Oil, gas, and geothermal properties—deductions . . . . . . . . . . . . . 17e f Other AMT items (attach statement) . . . . . . . . . . . . . . . . . 17f

Oth

er In

form

atio

n 18a Tax-exempt interest income . . . . . . . . . . . . . . . . . . . . 18a b Other tax-exempt income . . . . . . . . . . . . . . . . . . . . 18b c Nondeductible expenses . . . . . . . . . . . . . . . . . . . . . 18c

19a Distributions of cash and marketable securities . . . . . . . . . . . . . 19a b Distributions of other property . . . . . . . . . . . . . . . . . . . 19b

20a Investment income . . . . . . . . . . . . . . . . . . . . . . . 20a b Investment expenses . . . . . . . . . . . . . . . . . . . . . . 20b c Other items and amounts (attach statement) . . . . . . . . . . . . . .

Form 1065 (2016)



107,096

107,096

92,760

23,000104,800

200,000-0-

78,924

499,484

19,0004,0003,600

119,724

353,160499,484

24,0001,000

151,60072,760

60,000

24,00064,000

200,0007,000

106,400

461,400

26,0004,0003,600

130,000

297,800461,400

83,572

36,000

6,000*125,572

297,800

83,572

381,372

*$4,000 travel and entertainment plus $2,000 on loan to buy tax-exempt bonds.

18,000

47618,476

107,096

28,212

28,212353,160

25,1001,000

151,60045,200

18,000

476

Form 1065 (2016) Page 5 Analysis of Net Income (Loss)

1 Net income (loss). Combine Schedule K, lines 1 through 11. From the result, subtract the sum of Schedule K, lines 12 through 13d, and 16l . . . . . . . . . . . . . . . . . . 1

2

Analysis by partner type:

(i) Corporate (ii) Individual (active)

(iii) Individual (passive) (iv) Partnership (v) Exempt

Organization (vi)

Nominee/Other

a General partners b Limited partners

Schedule L Balance Sheets per Books Beginning of tax year End of tax year


1 Cash . . . . . . . . . . . . .2a Trade notes and accounts receivable . . .b Less allowance for bad debts . . . . .

3 Inventories . . . . . . . . . . .4 U.S. government obligations . . . . .5 Tax-exempt securities . . . . . . .6 Other current assets (attach statement) . .7a Loans to partners (or persons related to partners)

b Mortgage and real estate loans . . . .8 Other investments (attach statement) . . .9a Buildings and other depreciable assets . .

b Less accumulated depreciation . . . .10a Depletable assets . . . . . . . . .

b Less accumulated depletion . . . . .11 Land (net of any amortization) . . . . .12a Intangible assets (amortizable only) . . .

b Less accumulated amortization . . . .13 Other assets (attach statement) . . . .14 Total assets . . . . . . . . . . .

Liabilities and Capital 15 Accounts payable . . . . . . . . .16 Mortgages, notes, bonds payable in less than 1 year 17 Other current liabilities (attach statement) .18 All nonrecourse loans . . . . . . . .19a Loans from partners (or persons related to partners)

b Mortgages, notes, bonds payable in 1 year or more 20 Other liabilities (attach statement) . . . .21 Partners’ capital accounts . . . . . .22 Total liabilities and capital . . . . . .Schedule M-1 Reconciliation of Income (Loss) per Books With Income (Loss) per Return

Note. The partnership may be required to file Schedule M-3 (see instructions). 1 Net income (loss) per books . . . .

2

Income included on Schedule K, lines 1, 2, 3c,5, 6a, 7, 8, 9a, 10, and 11, not recorded onbooks this year (itemize):

3 Guaranteed payments (other than health insurance) . . . . . . .

4

Expenses recorded on books this year not included on Schedule K, lines 1 through 13d, and 16l (itemize):

a Depreciation $ b Travel and entertainment $

5 Add lines 1 through 4 . . . . . .

6

Income recorded on books this year not included on Schedule K, lines 1 through 11 (itemize):

a Tax-exempt interest $

7

Deductions included on Schedule K, lines 1 through 13d, and 16l, not charged against book income this year (itemize):

a Depreciation $

8 Add lines 6 and 7 . . . . . . . .9 Income (loss) (Analysis of Net Income

(Loss), line 1). Subtract line 8 from line 5 .

Schedule M-2 Analysis of Partners’ Capital Accounts 1 Balance at beginning of year . . .2 Capital contributed: a Cash . . .

b Property . .3 Net income (loss) per books . . . . 4 Other increases (itemize): 5 Add lines 1 through 4 . . . . . .

6 Distributions: a Cash . . . . . .b Property . . . . .

7 Other decreases (itemize):

8 Add lines 6 and 7 . . . . . . . .9 Balance at end of year. Subtract line 8 from line 5

Form 1065 (2016)



39,923

18,000

500

500

(1,050)

2,250

A 6,000

G 75U 40,000 V 26,000

A 57,923

A 150,106

A 757

A 9,000

C 3,000

A 14,106

A 500

505050

505050

73,162

148,900-0- 41,78614,106

176,580

x

x

x

Individual

xxx-xx-xxxx

Andrew Lawrence*333 Third StreetCity, ST 55555

xx-xxxxxxx

Johns and Lawrence1234 AvenueCity, ST 55555

Center, ST

*Schedule K-1 for Stephen Johns is similar to this one and is not reproduced here.**Investment income only if partner elects to tax dividends at ordinary rates under Sec. 163(d)(4)(B).

**

OMB No. 1545-0123

Schedule K-1 (Form 1065) 16Department of the Treasury Internal Revenue Service

For calendar year 2016, or tax

year beginning , 2016

ending , 20

Partner’s Share of Income, Deductions, Credits, etc. See back of form and separate instructions.

Final K-1 Amended K-1

Information About the Partnership Part I A

B Partnership’s name, address, city, state, and ZIP code

C

D Check if this is a publicly traded partnership (PTP)

Information About the Partner Part II E Partner’s identifying number

F Partner’s name, address, city, state, and ZIP code

G General partner or LLC member-manager

Limited partner or other LLC member

H Domestic partner Foreign partner

I1 What type of entity is this partner?

I2 If this partner is a retirement plan (IRA/SEP/Keogh/etc.), check here . . . . . .. . . . . . . . . . . . .

J Beginning Ending

% %

Loss % %

Capital % %

K Partner’s share of liabilities at year end:

Nonrecourse . . . . . . $

. $

Recourse . . . . . . . $

L Partner’s capital account analysis:

Beginning capital account . . . $

Capital contributed during the year $

Current year increase (decrease) . $

Withdrawals & distributions . . $ ( )

Ending capital account . . . . $

Tax basis GAAP Section 704(b) book

Other (explain)

M Did the partner contribute property with a built-in gain or loss?

Yes NoIf “Yes,” attach statement (see instructions)

Partner’s Share of Current Year Income, Deductions, Credits, and Other Items

Part III

1 Ordinary business income (loss)

2 Net rental real estate income (loss)

3 Other net rental income (loss)

4 Guaranteed payments

5 Interest income

6a Ordinary dividends

6b

7 Royalties

8 Net short-term capital gain (loss)

9a Net long-term capital gain (loss)

9b Collectibles (28%) gain (loss)

9c Unrecaptured section 1250 gain

10 Net section 1231 gain (loss)

11 Other income (loss)

12 Section 179 deduction

13 Other deductions

14 Self-employment earnings (loss)

15 Credits

16 Foreign transactions

17 Alternative minimum tax (AMT) items

18 Tax-exempt income and nondeductible expenses

19 Distributions

20 Other information

*See attached statement for additional information.

For

IRS

Use

Onl

y

For Paperwork Reduction Act Notice, see Instructions for Form 1065. Cat. No. 11394R Schedule K-1 (Form 1065) 2016 IRS.gov/form1065



Schedule K-1 (Form 1065) 2016 Page 2 This list identifies the codes used on Schedule K-1 for all partners and provides summarized reporting information for partners who file Form 1040. For detailed reporting and filing information, see the separate Partner’s Instructions for Schedule K-1 and the instructions for your income tax return.

1. Ordinary business income (loss). Determine whether the income (loss) is passive or nonpassive and enter on your return as follows.

Passive loss Report on See the Partner’s Instructions

Passive income Schedule E, line 28, column (g) Nonpassive loss Schedule E, line 28, column (h) Nonpassive income Schedule E, line 28, column (j)

2. Net rental real estate income (loss) See the Partner’s Instructions 3. Other net rental income (loss)

Net income Schedule E, line 28, column (g) Net loss See the Partner’s Instructions

4. Guaranteed payments Schedule E, line 28, column (j) 5. Interest income Form 1040, line 8a 6a. Ordinary dividends Form 1040, line 9a 6b. Qualified dividends Form 1040, line 9b 7. Royalties Schedule E, line 48. Net short-term capital gain (loss) Schedule D, line 59a. Net long-term capital gain (loss) Schedule D, line 129b. Collectibles (28%) gain (loss) 28% Rate Gain Worksheet, line 4

(Schedule D instructions) 9c. Unrecaptured section 1250 gain See the Partner’s Instructions

10. Net section 1231 gain (loss) See the Partner’s Instructions 11. Other income (loss)

Code A Other portfolio income (loss) See the Partner’s Instructions B Involuntary conversions See the Partner’s Instructions C Sec. 1256 contracts & straddles Form 6781, line 1 D Mining exploration costs recapture See Pub. 535E Cancellation of debt Form 1040, line 21 or Form 982 F Other income (loss) See the Partner’s Instructions

12. Section 179 deduction See the Partner’s Instructions 13. Other deductions

A Cash contributions (50%) B Cash contributions (30%) C Noncash contributions (50%) D Noncash contributions (30%) E Capital gain property to a 50%

organization (30%) F Capital gain property (20%) G Contributions (100%)

} See the Partner’s Instructions

H Investment interest expense Form 4952, line 1 I Deductions—royalty income Schedule E, line 19 J Section 59(e)(2) expenditures See the Partner’s Instructions K Deductions—portfolio (2% floor) Schedule A, line 23 L Deductions—portfolio (other) Schedule A, line 28 M Amounts paid for medical insurance Schedule A, line 1 or Form 1040, line 29 N Educational assistance benefits See the Partner’s Instructions O Dependent care benefits Form 2441, line 12P Preproductive period expenses See the Partner’s Instructions Q Commercial revitalization deduction

from rental real estate activities See Form 8582 instructions R Pensions and IRAs See the Partner’s Instructions S Reforestation expense deduction See the Partner’s Instructions T Domestic production activities

information See Form 8903 instructions U Qualified production activities income Form 8903, line 7b V Employer’s Form W-2 wages Form 8903, line 17W Other deductions See the Partner’s Instructions

14. Self-employment earnings (loss)Note. If you have a section 179 deduction or any partner-level deductions, see the Partner’s Instructions before completing Schedule SE.

A Net earnings (loss) from self-employment Schedule SE, Section A or B

B Gross farming or fishing income See the Partner’s Instructions C Gross non-farm income See the Partner’s Instructions

15. CreditsA Low-income housing credit

(section 42(j)(5)) from pre-2008 buildings

B Low-income housing credit (other) from pre-2008 buildings

C Low-income housing credit (section 42(j)(5)) from post-2007 buildings

D Low-income housing credit (other) from post-2007 buildings

E Qualified rehabilitation expenditures (rental real estate)

F Other rental real estate credits G Other rental credits


H Undistributed capital gains credit Form 1040, line 73; check box a I Biofuel producer credit J Work opportunity credit K Disabled access credit } See the Partner's Instructions

Code Report on L Empowerment zone

employment credit M Credit for increasing research

activities N Credit for employer social

security and Medicare taxes O Backup withholding P Other credits


16. Foreign transactionsA Name of country or U.S.

possession B Gross income from all sources C Gross income sourced at

partner level

} Form 1116, Part I

Foreign gross income sourced at partnership level D Passive category E General category F Other

} Form 1116, Part I

Deductions allocated and apportioned at partner level G Interest expense Form 1116, Part I H Other Form 1116, Part I Deductions allocated and apportioned at partnership level to foreign source income I Passive category J General category K Other

} Form 1116, Part I

Other information L Total foreign taxes paid Form 1116, Part II M Total foreign taxes accrued Form 1116, Part II N Reduction in taxes available for credit Form 1116, line 12 O Foreign trading gross receipts Form 8873 P Extraterritorial income exclusion Form 8873 Q Other foreign transactions See the Partner’s Instructions

17. Alternative minimum tax (AMT) itemsA Post-1986 depreciation adjustment B Adjusted gain or loss C Depletion (other than oil & gas) D Oil, gas, & geothermal—gross income E Oil, gas, & geothermal—deductions F Other AMT items

} See the Partner’s Instructions and the Instructions for Form 6251

18. Tax-exempt income and nondeductible expensesA Tax-exempt interest income Form 1040, line 8b B Other tax-exempt income See the Partner’s Instructions C Nondeductible expenses See the Partner’s Instructions

19. DistributionsA Cash and marketable securitiesB Distribution subject to section 737C Other property


20. Other informationA Investment income Form 4952, line 4a B Investment expenses Form 4952, line 5 C Fuel tax credit information Form 4136 D Qualified rehabilitation expenditures

(other than rental real estate) See the Partner’s Instructions E Basis of energy property See the Partner’s Instructions F Recapture of low-income housing

credit (section 42(j)(5)) Form 8611, line 8 G Recapture of low-income housing

credit (other) Form 8611, line 8 H Recapture of investment credit See Form 4255 I Recapture of other credits See the Partner’s Instructions J Look-back interest—completed

long-term contracts See Form 8697 K Look-back interest—income forecast

method See Form 8866 L Dispositions of property with

section 179 deductions M Recapture of section 179 deductionN Interest expense for corporate

partners O Section 453(l)(3) information P Section 453A(c) information Q Section 1260(b) information R Interest allocable to production

expenditures S CCF nonqualified withdrawals T Depletion information—oil and gas U ReservedV Unrelated business taxable incomeW Precontribution gain (loss) X Section 108(i) informationY Net investment income


Z Other information



Johns and Lawrence xx-xxxxxxx64,000

340,800143,204

7,00090,000

645,004104,800540,204

x

x

x



Cost of Goods Sold


OMB No. 1545-2225























Johns and Lawrence General Partnership Reconciliation of Book and Taxable Income for Year Ending December 31, 2016

Form 1065 Schedule K

Book Income Adjustments Taxable Income Ordinary Income

Separately Stated ItemsAccount Name Debit Credit Debit Credit Debit Credit

Sales $869,658 $869,658 $869,658 Sales returns & allowances $ 29,242 $ 29,242 (29,242) Cost of sales 540,204 540,204 (540,204) Dividends 1,000 1,000 $ 1,000Tax-exempt interest 18,000 $18,000 0 18,000Gain on stock sale 4,500 4,500 4,500Worthless stock loss 2,100 2,100 (2,100)Guaranteed payments(a) 36,000 $36,000 0 (36,000) Other salaries 52,000 52,000 (52,000) Rentals 36,000 36,000 (36,000) Bad debts 4,000 4,000 (4,000) Interest: Working capital loans 8,000 8,000 (8,000) Purchase tax-exempt bonds 2,000 2,000 0 (2,000)Employment taxes 8,320 8,320 (8,320) Taxes 1,520 1,520 (1,520) Repairs 4,800 4,800 (4,800) Depreciation(b) 12,000 476 12,476 (12,476) Charitable contributions 12,000 12,000 (12,000)Travel 4,000 4,000 (4,000) Meals and entertainment(c) 8,000 4,000 4,000 (4,000) Meals and ent. nondeductible (4,000)Office expenses 16,000 16,000 (16,000) Advertising 13,000 13,000 (13,000) Transportation expense 10,400 10,400 (10,400) General and administrative 3,000 3,000 (3,000) Pension plans(d) 2,000 2,000 (2,000) Employee benefit programs(e) 4,000 4,000 (4,000) Miscellaneous 1,000 1,000 (850) (150)Net profit/Taxable income 83,572 $23,524 107,096

Total $893,158 $893,158 $42,000 $42,000 $875,158 $875,158 $ 79,846

(a) Guaranteed payments have no net effect on taxable income. The guaranteed payments both reduce ordinary income and increase separately stated income items that are taxable.

(b) MACRS depreciation 5 $27,476 total 2 $15,000 allocated to COGS 5 $12,476(c) 50% of the meals and entertainment expense is not deductible for tax purposes but must be separately stated on Schedules K and K-1.(d) The pension plan expense is the same for book and tax purposes for this partnership. No pension expenses relate to pensions for the partners.(e) The employee benefit expense is the same for book and tax purposes for this partnership. None relates to partner benefits.



Facts for s Corporation (Form 1120s)

The same basic facts presented for the Andrew Lawrence proprietorship are used for the S corporation except for the following:

1. Johns and Lawrence, Inc. made an S corporation election on June 13, 2010. The election was effective for its initial tax year.

2. The book income for Johns and Lawrence is presented in the attached worksheet, which reconciles book income and S corporation taxable income.

3. The $18,000 salaries paid to each employee are subject to the same employment tax re-quirements as when paid by the C corporation. The total employment taxes ($14,480) are the same as for the C corporation.

4. The S corporation paid no estimated federal income taxes.

5. The corporation distributed $14,106 to each of the two shareholders.


Travel $ 4,000Meals and entertainment 8,000Minus: 50% disallowance (4,000)Office expenses 16,000Transportation 10,400General and administrative 3,000Miscellaneous* 850Total $38,250

*$150 of the miscellaneous expenses are related to the production of the dividend income and are sepa-rately stated.

7. The following schedule reconciles net income for the C corporation and the S corporation:

Net income per books for C corporation $63,412Plus: Federal income taxes 14,000Net income per books for S corporation $77,412

The S corporation return can be tied back to the partnership return. The only difference between the two returns is that the S corporation pays an additional $6,160 in employ-ment taxes with respect to the shareholder-employee salaries, as compared to the partner-ship’s guaranteed payments. This dollar difference is reflected in the net income numbers, the ordinary income numbers, capital account balances, and total asset amounts.


9. The balance sheet for Johns and Lawrence appears on page 4 of Form 1120S.

10. For additional information, see worksheet on page B-47.



6-13-2010

6-1-2010337000

498,324

840,416

869,65829,242

2

540,204300,212

300,21236,00052,0004,8004,000

36,00016,0008,00012,476

NONE

NONE

NONE

13,0002,0004,00038,250

226,526

XX

Michael S. PrepperMichael Prepper

1111 Second Street, City, ST 55555

3-14-17

3-14-17

Vice-President

73,686

Johns and Lawrence, Inc.

1234 First Avenue

City, ST 55555

xx-xxxxxxx

Form 1120SDepartment of the Treasury Internal Revenue Service

U.S. Income Tax Return for an S Corporation Do not file this form unless the corporation has filed or isattaching Form 2553 to elect to be an S corporation.

Information about Form 1120S and its separate instructions is at www.irs.gov/form1120s.

OMB No. 1545-0123

16For calendar year 2016 or tax year beginning , 2016, ending , 20

TYPE

OR

PRINT

Name



A S election e�ective date

B Business activity code number (see instructions)

C Check if Sch. M-3 attached

D Employer identification number

E Date incorporated

F Total assets (see instructions)

$

G Is the corporation electing to be an S corporation beginning with this tax year? Yes No If “Yes,” attach Form 2553 if not already filed H Check if: (1) Final return (2) Name change (3) Address change (4) Amended return (5) S election termination or revocation I Enter the number of shareholders who were shareholders during any part of the tax year . . . . . . . . .Caution: Include only trade or business income and expenses on lines 1a through 21. See the instructions for more information.

Inco

me

1 a Gross receipts or sales . . . . . . . . . . . . . . . 1ab Returns and allowances . . . . . . . . . . . . . . 1b c Balance. Subtract line 1b from line 1a . . . . . . . . . . . . . . . . . . . 1c

2 Cost of goods sold (attach Form 1125-A) . . . . . . . . . . . . . . . . . . 2 3 Gross profit. Subtract line 2 from line 1c . . . . . . . . . . . . . . . . . . 3 4 Net gain (loss) from Form 4797, line 17 (attach Form 4797) . . . . . . . . . . . . 4 5 Other income (loss) (see instructions—attach statement) . . . . . . . . . . . . . 5 6 Total income (loss). Add lines 3 through 5 . . . . . . . . . . . . . . . . 6

Ded

uctio

ns (

see

inst

ruct

ions

for

limita

tions

) 7 Compensation of o�cers (see instructions—attach Form 1125-E) . . . . . . . . . . 7 8 Salaries and wages (less employment credits) . . . . . . . . . . . . . . . . 8 9 Repairs and maintenance . . . . . . . . . . . . . . . . . . . . . . . 9

10 Bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 11 Rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 12 Taxes and licenses . . . . . . . . . . . . . . . . . . . . . . . . . 12 13 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 14 Depreciation not claimed on Form 1125-A or elsewhere on return (attach Form 4562) . . . . 14 15 Depletion (Do not deduct oil and gas depletion.) . . . . . . . . . . . . . . . 15 16 Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 17 Pension, profit-sharing, etc., plans . . . . . . . . . . . . . . . . . . . . 17 18 Employee benefit programs . . . . . . . . . . . . . . . . . . . . . . 18 19 Other deductions (attach statement) . . . . . . . . . . . . . . . . . . . 19 20 Total deductions. Add lines 7 through 19 . . . . . . . . . . . . . . . . 20 21 Ordinary business income (loss). Subtract line 20 from line 6 . . . . . . . . . . . 21

Tax

and

Pay

men

ts

22 a Excess net passive income or LIFO recapture tax (see instructions) . . 22a b Tax from Schedule D (Form 1120S) . . . . . . . . . . . 22b c Add lines 22a and 22b (see instructions for additional taxes) . . . . . . . . . . . . 22c

23a 2016 estimated tax payments and 2015 overpayment credited to 2016 23a b Tax deposited with Form 7004 . . . . . . . . . . . . 23b c Credit for federal tax paid on fuels (attach Form 4136) . . . . . 23c d Add lines 23a through 23c . . . . . . . . . . . . . . . . . . . . . . 23d

24 Estimated tax penalty (see instructions). Check if Form 2220 is attached . . . . . . 24 25 Amount owed. If line 23d is smaller than the total of lines 22c and 24, enter amount owed . . 25 26 Overpayment. If line 23d is larger than the total of lines 22c and 24, enter amount overpaid . . 26 27 Enter amount from line 26 Credited to 2017 estimated tax Refunded 27

Sign Here






PTIN



For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11510H Form 1120S (2016)



x

x

x

x

x

x

x

x

x

xx

Manufacturing Furniture

-0-N/A

Form 1120S (2016) Page 2 Schedule B Other Information (see instructions)

1 Check accounting method: a Cash b Accrual Yes No

c Other (specify) 2 See the instructions and enter the:

a Business activity b Product or service

3 At any time during the tax year, was any shareholder of the corporation a disregarded entity, a trust, an estate, or a nominee or similar person? If "Yes," attach Schedule B-1, Information on Certain Shareholders of an S Corporation . .

4 At the end of the tax year, did the corporation:

a Own directly 20% or more, or own, directly or indirectly, 50% or more of the total stock issued and outstanding of any foreign or domestic corporation? For rules of constructive ownership, see instructions. If “Yes,” complete (i) through (v) below . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(i) Name of Corporation (ii) Employer Identification Number (if any)

(iii) Country of Incorporation

(iv) Percentage of Stock Owned

(v) If Percentage in (iv) is 100%, Enter the Date (if any) a Qualified Subchapter S

Subsidiary Election Was Made

b Own directly an interest of 20% or more, or own, directly or indirectly, an interest of 50% or more in the profit, loss, or capital in any foreign or domestic partnership (including an entity treated as a partnership) or in the beneficial interest of a trust? For rules of constructive ownership, see instructions. If “Yes,” complete (i) through (v) below . . . . . . .

(i) Name of Entity (ii) Employer Identification Number (if any) (iii) Type of Entity (iv) Country of

Organization(v) Maximum Percentage Owned in Profit,

Loss, or Capital

5 a At the end of the tax year, did the corporation have any outstanding shares of restricted stock? . . . . . . . . If “Yes,” complete lines (i) and (ii) below.(i) Total shares of restricted stock . . . . . . . . . (ii) Total shares of non-restricted stock . . . . . . . .

b At the end of the tax year, did the corporation have any outstanding stock options, warrants, or similar instruments? .

If “Yes,” complete lines (i) and (ii) below.(i) Total shares of stock outstanding at the end of the tax year (ii) Total shares of stock outstanding if all instruments were executed

6 Has this corporation filed, or is it required to file, Form 8918, Material Advisor Disclosure Statement, to provide information on any reportable transaction? . . . . . . . . . . . . . . . . . . . . . . . .

7 Check this box if the corporation issued publicly o�ered debt instruments with original issue discount . . . .

If checked, the corporation may have to file Form 8281, Information Return for Publicly O�ered Original Issue Discount Instruments.

8 If the corporation: (a) was a C corporation before it elected to be an S corporation or the corporation acquired an asset with a basis determined by reference to the basis of the asset (or the basis of any other property) in the hands of a C corporation and (b) has net unrealized built-in gain in excess of the net recognized built-in gain from prior years, enter the net unrealized built-in gain reduced by net recognized built-in gain from prior years (see instructions) . . . . . . . . . . . . . . . $

9 Enter the accumulated earnings and profits of the corporation at the end of the tax year. $

10 Does the corporation satisfy both of the following conditions?a The corporation’s total receipts (see instructions) for the tax year were less than $250,000 . . . . . . . . . .b The corporation’s total assets at the end of the tax year were less than $250,000 . . . . . . . . . . . .

If “Yes,” the corporation is not required to complete Schedules L and M-1.

11 During the tax year, did the corporation have any non-shareholder debt that was canceled, was forgiven, or had the terms modified so as to reduce the principal amount of the debt? . . . . . . . . . . . . . . . . .If “Yes,” enter the amount of principal reduction $

12 During the tax year, was a qualified subchapter S subsidiary election terminated or revoked? If “Yes,” see instructions .13 a Did the corporation make any payments in 2016 that would require it to file Form(s) 1099? . . . . . . . . . .

b If “Yes,” did the corporation file or will it file required Forms 1099? . . . . . . . . . . . . . . . . .Form 1120S (2016)



Form 1120S (2016) Page 3 Schedule K Shareholders’ Pro Rata Share Items Total amount

Inco

me

(Lo

ss)

1 Ordinary business income (loss) (page 1, line 21) . . . . . . . . . . . . . . 1 2 Net rental real estate income (loss) (attach Form 8825) . . . . . . . . . . . . 2 3a Other gross rental income (loss) . . . . . . . . . . 3a

b Expenses from other rental activities (attach statement) . . 3b c Other net rental income (loss). Subtract line 3b from line 3a . . . . . . . . . . 3c

4 Interest income . . . . . . . . . . . . . . . . . . . . . . . . 4 5 Dividends: a Ordinary dividends . . . . . . . . . . . . . . . . . . . 5a

b Qualified dividends . . . . . . . . . . 5b 6 Royalties . . . . . . . . . . . . . . . . . . . . . . . . . . 6 7 Net short-term capital gain (loss) (attach Schedule D (Form 1120S)) . . . . . . . . 7 8 a Net long-term capital gain (loss) (attach Schedule D (Form 1120S)) . . . . . . . . 8a

b Collectibles (28%) gain (loss) . . . . . . . . . . . 8b c Unrecaptured section 1250 gain (attach statement) . . . . 8c

9 Net section 1231 gain (loss) (attach Form 4797) . . . . . . . . . . . . . . 9 10 Other income (loss) (see instructions) . . Type 10

Ded

uctio

ns 11 Section 179 deduction (attach Form 4562) . . . . . . . . . . . . . . . . 11

12 a Charitable contributions . . . . . . . . . . . . . . . . . . . . . 12a b Investment interest expense . . . . . . . . . . . . . . . . . . . . 12b c Section 59(e)(2) expenditures (1) Type (2) Amount 12c(2) d Other deductions (see instructions) . . . Type 12d

Cre

dits

13a Low-income housing credit (section 42(j)(5)) . . . . . . . . . . . . . . . 13a b Low-income housing credit (other) . . . . . . . . . . . . . . . . .

.. 13b

c Qualified rehabilitation expenditures (rental real estate) (attach Form 3468, if applicable) . 13c d Other rental real estate credits (see instructions) Type 13d e Other rental credits (see instructions) . . . Type 13e f Biofuel producer credit (attach Form 6478) . . . . . . . . . . . . . . . 13f g Other credits (see instructions) . . . . . Type 13g

Fore

ign

Tra

nsac

tions

14a Name of country or U.S. possession

b Gross income from all sources . . . . . . . . . . . . . . . . . . . 14b c Gross income sourced at shareholder level . . . . . . . . . . . . . . . 14c

Foreign gross income sourced at corporate leveld Passive category . . . . . . . . . . . . . . . . . . . . . . . 14d e General category . . . . . . . . . . . . . . . . . . . . . . . 14e f Other (attach statement) . . . . . . . . . . . . . . . . . . . . . 14f

Deductions allocated and apportioned at shareholder level g Interest expense . . . . . . . . . . . . . . . . . . . . . . . . 14g h Other . . . . . . . . . . . . . . . . . . . . . . . . . . . 14h

Deductions allocated and apportioned at corporate level to foreign source income i Passive category . . . . . . . . . . . . . . . . . . . . . . . 14i j General category . . . . . . . . . . . . . . . . . . . . . . . 14j k Other (attach statement) . . . . . . . . . . . . . . . . . . . . . 14k

Other information l Total foreign taxes (check one): Paid Accrued . . . . . . . . . . 14l m Reduction in taxes available for credit (attach statement) . . . . . . . . . . . 14m n Other foreign tax information (attach statement)

Alte

rnat

ive

M

inim

um T

ax

(AM

T) I

tem

s

15 a Post-1986 depreciation adjustment . . . . . . . . . . . . . . . . . . 15a b Adjusted gain or loss . . . . . . . . . . . . . . . . . . . . . . 15b c Depletion (other than oil and gas) . . . . . . . . . . . . . . . . . . 15c d Oil, gas, and geothermal properties—gross income . . . . . . . . . . . . . 15d e Oil, gas, and geothermal properties—deductions . . . . . . . . . . . . . . 15e f Other AMT items (attach statement) . . . . . . . . . . . . . . . . . . 15f

Item

s A

�ec

ting

S

hare

hold

er

Bas

is

16 a Tax-exempt interest income . . . . . . . . . . . . . . . . . . . . 16a b Other tax-exempt income . . . . . . . . . . . . . . . . . . . . . 16b c Nondeductible expenses . . . . . . . . . . . . . . . . . . . . . 16c d Distributions (attach statement if required) (see instructions) . . . . . . . . . . 16d e Repayment of loans from shareholders . . . . . . . . . . . . . . . . . 16e

Form 1120S (2016)



Form 1120S (2016) Page 4 Schedule K Shareholders’ Pro Rata Share Items (continued) Total amount

Oth

er

Info

rmat

ion 17a Investment income . . . . . . . . . . . . . . . . . . . . . . . 17a

b Investment expenses . . . . . . . . . . . . . . . . . . . . . . 17b c Dividend distributions paid from accumulated earnings and profits . . . . . . . . 17c d Other items and amounts (attach statement)

Rec

on-

ci

liatio

n

18

Income/loss reconciliation. Combine the amounts on lines 1 through 10 in the far right column. From the result, subtract the sum of the amounts on lines 11 through 12d and 14l 18

Schedule L Balance Sheets per Books Beginning of tax year End of tax year

( ) ( )

( ) ( )

( ) ( )

( ) ( )

( ) ( )


1 Cash . . . . . . . . . . . . .2a Trade notes and accounts receivable . . .b Less allowance for bad debts . . . . . .

3 Inventories . . . . . . . . . . .4 U.S. government obligations . . . . . .5 Tax-exempt securities (see instructions) . .6 Other current assets (attach statement) . . .7 Loans to shareholders . . . . . . . .8 Mortgage and real estate loans . . . . .9 Other investments (attach statement) . . .

10a Buildings and other depreciable assets . . .b Less accumulated depreciation . . . . .

11a Depletable assets . . . . . . . . .b Less accumulated depletion . . . . . .

12 Land (net of any amortization) . . . . . .13a Intangible assets (amortizable only) . . . .

b Less accumulated amortization . . . . .14 Other assets (attach statement) . . . . .15 Total assets . . . . . . . . . . .

Liabilities and Shareholders’ Equity 16 Accounts payable . . . . . . . . .17 Mortgages, notes, bonds payable in less than 1 year 18 Other current liabilities (attach statement) . .19 Loans from shareholders . . . . . . .20 Mortgages, notes, bonds payable in 1 year or more 21 Other liabilities (attach statement) . . . .22 Capital stock . . . . . . . . . . .23 Additional paid-in capital . . . . . . .24 Retained earnings . . . . . . . . .25 Adjustments to shareholders’ equity (attach statement) 26 Less cost of treasury stock . . . . . .27 Total liabilities and shareholders’ equity . .

Form 1120S (2016)



77,412

6,0004,000

Interest on loans* $2,000

18,000

476

18,000

47618,47664,93683,412

86,100 11,700

18,000

2,000

27,700

27,700

73,6865,500**

18,250***147,03628,212

118,824 *For municipal bonds **$1,000 + $4,500 = $5,500***$12,000 + $4,000 + $150 +$2,100 = $18,250

Form 1120S (2016) Page 5 Schedule M-1 Reconciliation of Income (Loss) per Books With Income (Loss) per Return

Note: The corporation may be required to file Schedule M-3 (see instructions)

1 Net income (loss) per books . . . . . .

2 Income included on Schedule K, lines 1, 2, 3c, 4, 5a, 6, 7, 8a, 9, and 10, not recorded on books thisyear (itemize)

3 Expenses recorded on books this year not included on Schedule K, lines 1 through 12 and 14l (itemize):

a Depreciation $

b Travel and entertainment $

4 Add lines 1 through 3 . . . . . . . .

5

Income recorded on books this year not included on Schedule K, lines 1 through 10 (itemize):

a Tax-exempt interest $

6

Deductions included on Schedule K, lines 1 through 12 and 14l, not charged against book income this year (itemize):

a Depreciation $

7 Add lines 5 and 6 . . . . .8 Income (loss) (Schedule K, line 18). Line 4 less line 7

Schedule M-2 Analysis of Accumulated Adjustments Account, Other Adjustments Account, and Shareholders’ Undistributed Taxable Income Previously Taxed (see instructions)

( )( ) ( )

(a) Accumulated adjustments account

(b) Other adjustments account

(c) Shareholders’ undistributed taxable income previously taxed

1 Balance at beginning of tax year . . . . .2 Ordinary income from page 1, line 21 . . .3 Other additions . . . . . . . . . .4 Loss from page 1, line 21 . . . . . . .5 Other reductions . . . . . . . . . .6 Combine lines 1 through 5 . . . . . . .7 Distributions other than dividend distributions 8 Balance at end of tax year. Subtract line 7 from line 6

Form 1120S (2016)



xx-xxxxxxx

36,843

500

500

(1,050)

2,250

6,000

9,000

3,000

14,106

500 **

757

75

40,000

44,000

Center, ST

xxx-xx-xxxx

Johns and Lawrence, Inc.1234 First AvenueCity, ST 55555

Andrew Lawrence*333 Third StreetCity, ST 55555

50%

G

Q

R

A

A

C

D

A

A

*Schedule K-1 for Stephen Johns is similar to this one and is not reproduced here.**Investment income only if shareholder elects to tax dividends at ordinary rates under Sec. 163(d)(4)(B).

Final K-1 Amended K-1 OMB No. 1545-0123 Schedule K-1 (Form 1120S) Department of the Treasury Internal Revenue Service

16For calendar year 2016, or tax

year beginning , 2016

ending , 20

Shareholder’s Share of Income, Deductions, Credits, etc. See back of form and separate instructions.

Information About the Corporation Part I

A Corporation’s employer identification number

B Corporation’s name, address, city, state, and ZIP code

C IRS Center where corporation filed return

Information About the Shareholder Part II

D Shareholder’s identifying number

E Shareholder’s name, address, city, state, and ZIP code

F Shareholder’s percentage of stock ownership for tax year . . . . . . . %

For

IRS

Use

Onl

y Shareholder’s Share of Current Year Income, Deductions, Credits, and Other Items

Part III

1 Ordinary business income (loss)

2 Net rental real estate income (loss)

3 Other net rental income (loss)

4 Interest income


5b Qualified dividends

6 Royalties

7 Net short-term capital gain (loss)

8a Net long-term capital gain (loss)

8b Collectibles (28%) gain (loss)


9 Net section 1231 gain (loss)

10 Other income (loss)

11 Section 179 deduction

12 Other deductions

13 Credits

14 Foreign transactions

15 Alternative minimum tax (AMT) items

16 Items a�ecting shareholder basis


* See attached statement for additional information.

For Paperwork Reduction Act Notice, see Instructions for Form 1120S. IRS.gov/form1120s Cat. No. 11520D Schedule K-1 (Form 1120S) 2016



Schedule K-1 (Form 1120S) 2016 Page 2 This list identifies the codes used on Schedule K-1 for all shareholders and provides summarized reporting information for shareholders who file Form 1040. For detailed reporting and filing information, see the separate Shareholder’s Instructions for Schedule K-1 and the instructions for your income tax return.

1. Ordinary business income (loss). Determine whether the income (loss) is passive or nonpassive and enter on your return as follows:

Passive income

Report on Passive loss See the Shareholder’s Instructions

Schedule E, line 28, column (g) Nonpassive loss Schedule E, line 28, column (h) Nonpassive income Schedule E, line 28, column (j)

2. Net rental real estate income (loss) See the Shareholder’s Instructions 3. Other net rental income (loss)

Net income Schedule E, line 28, column (g) Net loss See the Shareholder’s Instructions

4. Interest income Form 1040, line 8a 5a. Ordinary dividends Form 1040, line 9a 5b. Qualified dividends Form 1040, line 9b 6. Royalties Schedule E, line 47. Net short-term capital gain (loss) Schedule D, line 58a. Net long-term capital gain (loss) Schedule D, line 128b. Collectibles (28%) gain (loss) 28% Rate Gain Worksheet, line 4

(Schedule D instructions) 8c. Unrecaptured section 1250 gain See the Shareholder’s Instructions 9. Net section 1231 gain (loss) See the Shareholder’s Instructions

10. Other income (loss) Code A Other portfolio income (loss) See the Shareholder’s Instructions

B Involuntary conversions See the Shareholder’s Instructions C Sec. 1256 contracts & straddles Form 6781, line 1 D Mining exploration costs recapture See Pub. 535 E Other income (loss) See the Shareholder’s Instructions

11. Section 179 deduction See the Shareholder’s Instructions 12. Other deductions

A Cash contributions (50%) B Cash contributions (30%) C Noncash contributions (50%) D Noncash contributions (30%) E Capital gain property to a 50%

organization (30%) F Capital gain property (20%) G Contributions (100%)

} See the Shareholder’s Instructions

H Investment interest expense Form 4952, line 1 I Deductions—royalty income Schedule E, line 19 J Section 59(e)(2) expenditures See the Shareholder’s Instructions K Deductions—portfolio (2% floor) Schedule A, line 23 L Deductions—portfolio (other) Schedule A, line 28

M Preproductive period expenses See the Shareholder’s Instructions N Commercial revitalization deduction

from rental real estate activities See Form 8582 instructions O Reforestation expense deduction See the Shareholder’s Instructions P Domestic production activities

information See Form 8903 instructions Q Qualified production activities income Form 8903, line 7b R Employer’s Form W-2 wages Form 8903, line 17 S Other deductions See the Shareholder’s Instructions

13. Credits A Low-income housing credit (section

42(j)(5)) from pre-2008 buildings B Low-income housing credit (other) from

pre-2008 buildings C Low-income housing credit (section

42(j)(5)) from post-2007 buildings D Low-income housing credit (other)

from post-2007 buildings E Qualified rehabilitation expenditures

(rental real estate) F Other rental real estate credits G Other rental credits


H Undistributed capital gains credit Form 1040, line 73, box a I Biofuel producer creditJ Work opportunity credit K Disabled access credit L Empowerment zone employment

credit M Credit for increasing research

activities


Code Report on

N Credit for employer social security and Medicare taxes

O Backup withholding P Other credits


14. Foreign transactions A Name of country or U.S.

possession B Gross income from all sources C Gross income sourced at

shareholder level } Form 1116, Part I

Foreign gross income sourced at corporate level D Passive category E General category F Other } Form 1116, Part I

Deductions allocated and apportioned at shareholder level G Interest expense Form 1116, Part I H Other Form 1116, Part I Deductions allocated and apportioned at corporate level to foreign source income I Passive category J General category K Other } Form 1116, Part I

Other information L Total foreign taxes paid Form 1116, Part II M Total foreign taxes accrued Form 1116, Part II N Reduction in taxes available for

credit Form 1116, line 12 O Foreign trading gross receipts Form 8873 P Extraterritorial income exclusion Form 8873 Q Other foreign transactions See the Shareholder’s Instructions

15. Alternative minimum tax (AMT) items A Post-1986 depreciation adjustment B Adjusted gain or loss C Depletion (other than oil & gas) D Oil, gas, & geothermal—gross income E Oil, gas, & geothermal—deductions F Other AMT items

} See the Shareholder’s Instructions and the Instructions for Form 6251

16. Items a�ecting shareholder basis A Tax-exempt interest income Form 1040, line 8b B Other tax-exempt income C Nondeductible expenses D Distributions E Repayment of loans from

shareholders } See the Shareholder’s

Instructions

17. Other information A Investment income Form 4952, line 4a B Investment expenses Form 4952, line 5 C Qualified rehabilitation expenditures

(other than rental real estate) See the Shareholder’s Instructions D Basis of energy property See the Shareholder’s Instructions E Recapture of low-income housing

credit (section 42(j)(5)) Form 8611, line 8 F Recapture of low-income housing

credit (other) Form 8611, line 8 G Recapture of investment credit See Form 4255 H Recapture of other credits See the Shareholder’s Instructions I Look-back interest—completed

long-term contracts See Form 8697 J Look-back interest—income forecast

method See Form 8866 K Dispositions of property with

section 179 deductions L Recapture of section 179

deduction M Section 453(l)(3) information N Section 453A(c) information O Section 1260(b) information P Interest allocable to production

expenditures Q CCF nonqualified withdrawals R Depletion information—oil and gas

Other information

S ReservedT Section 108(i) informationU Net investment income V






Cost of Goods Sold


OMB No. 1545-2225























Johns and Lawrence, Inc. (S Corporation) Reconciliation of Book and Taxable Income for Year Ending December 31, 2016

Form 1120S Schedule K Book Income Adjustments Taxable Income Ordinary

IncomeSeparately

Stated ItemsAccount Name Debit Credit Debit Credit Debit Credit

Sales $869,658 $869,658 $869,658 Sales returns & allowances $ 29,242 $ 29,242 (29,242) Cost of sales 540,204 540,204 (540,204) Dividends 1,000 1,000 1,000Tax-exempt interest 18,000 $18,000 0 $18,000Gain on stock sale 4,500 4,500 4,500Worthless stock loss 2,100 2,100 (2,100)Officers salaries(a) 36,000 36,000 (36,000) Other salaries 52,000 52,000 (52,000) Rentals 36,000 36,000 (36,000) Bad debts 4,000 4,000 (4,000) Interest: Working capital loans 8,000 8,000 (8,000) Purchase tax-exempt bonds 2,000 $ 2,000 0 (2,000)Employment taxes 14,480 14,480 (14,480) Taxes 1,520 1,520 (1,520) Repairs 4,800 4,800 (4,800) Depreciation(b) 12,000 476 12,476 (12,476) Charitable contributions 12,000 12,000 (12,000)Travel 4,000 4,000 (4,000) Meals and entertainment(c) 8,000 4,000 4,000 (4,000) Meals and ent. nondeductible (4,000)Office expenses 16,000 16,000 (16,000) Advertising 13,000 13,000 (13,000) Transportation expense 10,400 10,400 (10,400) General and administrative 3,000 3,000 (3,000) Pension plans(d) 2,000 2,000 (2,000) Employee benefit programs(e) 4,000 4,000 (4,000) Miscellaneous 1,000 1,000 (850) (150)Net profit/Taxable income 77,412 12,476 64,936 Total $893,158 $893,158 $18,476 $18,476 $875,158 $875,158 $ 73,686

(a) Salaries for the S corporation’s shareholder-employees are deductible by the S corporation and are subject to the same employee taxes imposed on nonshareholder-employees.

(b) MACRS depreciation 5 $27,476 total 2 $15,000 allocated to COGS 5 $12,476(c) 50% of the meals and entertainment expense is not deductible for tax purposes but must be separately stated on the Schedules K and K-1.(d) The pension plan expense is the same for book and tax purposes for this corporation. No pension expenses relate to pensions for the

shareholder-employees.(e) The employee benefit expense is the same for book and tax purposes for this corporation. None relates to shareholder-employee benefits.



Hugh Brown

Wilma Brown

Sally Preparer


United States Gift (and Generation-Skipping Transfer) Tax Return Information about Form 709 and its separate instructions is at www.irs.gov/form709.

(For gifts made during calendar year 2016) See instructions.

OMB No. 1545-0020

16

Par

t 1—

Gen

eral

Info

rmat

ion

1 Donor’s first name and middle initial 2 Donor’s last name 3 Donor’s social security number

4 Address (number, street, and apartment number) 5 Legal residence (domicile)

6 City or town, state or province, country, and ZIP or foreign postal code 7 Citizenship (see instructions)

8 If the donor died during the year, check here and enter date of death , . Yes No

9 If you extended the time to file this Form 709, check here 10 Enter the total number of donees listed on Schedule A. Count each person only once.

11 a Have you (the donor) previously filed a Form 709 (or 709-A) for any other year? If "No," skip line 11b . . . . . . .b Has your address changed since you last filed Form 709 (or 709-A)? . . . . . . . . . . . . . . . .

12 Gifts by husband or wife to third parties. Do you consent to have the gifts (including generation-skipping transfers) madeby you and by your spouse to third parties during the calendar year considered as made one-half by each of you? (see instructions.) (If the answer is “Yes,” the following information must be furnished and your spouse must sign the consent shown below. If the answer is “No,” skip lines 13–18.) . . . . . . . . . . . . . . . . . . . .

13 Name of consenting spouse 14 SSN 15 Were you married to one another during the entire calendar year? (see instructions) . . . . . . . . . . . .16 If 15 is “No,” check whether married divorced or widowed/deceased, and give date (see instructions) 17 Will a gift tax return for this year be filed by your spouse? (If “Yes,” mail both returns in the same envelope.) . . . . .18 Consent of Spouse. I consent to have the gifts (and generation-skipping transfers) made by me and by my spouse to third parties during the calendar year

considered as made one-half by each of us. We are both aware of the joint and several liability for tax created by the execution of this consent.

Consenting spouse’s signature Date

19 Have you applied a DSUE amount received from a predeceased spouse to a gift or gifts reported on this or a previous Form 709? If “Yes,” complete Schedule C . . . . . . . . . . . . . . . . . . . . . . . . . .

Par

t 2—

Tax

Co

mp

utat

ion

1 Enter the amount from Schedule A, Part 4, line 11 . . . . . . . . . . . . . . . 1 2 Enter the amount from Schedule B, line 3 . . . . . . . . . . . . . . . . . 2 3 Total taxable gifts. Add lines 1 and 2 . . . . . . . . . . . . . . . . . . . 3 4 Tax computed on amount on line 3 (see Table for Computing Gift Tax in instructions) . . . . 4 5 Tax computed on amount on line 2 (see Table for Computing Gift Tax in instructions) . . . . 5 6 Balance. Subtract line 5 from line 4 . . . . . . . . . . . . . . . . . . . 6

7 Applicable credit amount. If donor has DSUE amount from predeceased spouse(s), enter amount from Schedule C, line 4; otherwise, see instructions . . . . . . . . . . . . . . 7

8 Enter the applicable credit against tax allowable for all prior periods (from Sch. B, line 1, col. C) . 8 9 Balance. Subtract line 8 from line 7. Do not enter less than zero . . . . . . . . . . . 9

10 Enter 20% (.20) of the amount allowed as a specific exemption for gifts made after September 8, 1976, and before January 1, 1977 (see instructions) . . . . . . . . . . . . . . 10

11 Balance. Subtract line 10 from line 9. Do not enter less than zero . . . . . . . . . . 11 12 Applicable credit. Enter the smaller of line 6 or line 11 . . . . . . . . . . . . . . 12 13 Credit for foreign gift taxes (see instructions) . . . . . . . . . . . . . . . . 13 14 Total credits. Add lines 12 and 13 . . . . . . . . . . . . . . . . . . . . 14 15 Balance. Subtract line 14 from line 6. Do not enter less than zero . . . . . . . . . . 15

Att

ach

chec

k o

r m

one

y o

rder

her

e. 16 Generation-skipping transfer taxes (from Schedule D, Part 3, col. H, Total) . . . . . . . . 16

17 Total tax. Add lines 15 and 16 . . . . . . . . . . . . . . . . . . . . . 17 18 Gift and generation-skipping transfer taxes prepaid with extension of time to file . . . . . . 18 19 If line 18 is less than line 17, enter balance due (see instructions) . . . . . . . . . . 19 20 If line 18 is greater than line 17, enter amount to be refunded . . . . . . . . . . . 20

Sign Here

Under penalties of perjury, I declare that I have examined this return, including any accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than donor) is based on all information of which preparer has any knowledge.


Signature of donor Date



PTIN

Firm’s name

Firm’s address

Firm's EIN

Phone no.

For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see the instructions for this form. Cat. No. 16783M Form 709 (2016)



x

678,155

50,000300,000

1,028,155

78,155

50,000300,000

756,310

100,000600,000

593,000

32,000112,000

1-4 Schedule attached

5 State University, stock 6 Betsy Brown, daughter, land

2016

2016

2016

Form 709 (2016) Page 2 SCHEDULE A Computation of Taxable Gifts (Including transfers in trust) (see instructions)

A Does the value of any item listed on Schedule A reflect any valuation discount? If “Yes,” attach explanation . . . . . . Yes No

B Check here if you elect under section 529(c)(2)(B) to treat any transfers made this year to a qualified tuition program as made ratably over a 5-year period beginning this year. See instructions. Attach explanation.

Part 1—Gifts Subject Only to Gift Tax. Gifts less political organization, medical, and educational exclusions. (see instructions)

Gifts made by spouse —complete only if you are splitting gifts with your spouse and he/she also made gifts.

A Item

number

B • Donee’s name and address • Relationship to donor (if any) • Description of gift • If the gift was of securities, give CUSIP no. • If closely held entity, give EIN

C D Donor’s adjusted

basis of gift

E Date of gift

F Value at

date of gift

G For split

gifts, enter 1/2 of

column F

H Net transfer

(subtract col. G from

col. F)

Total of Part 1. Add amounts from Part 1, column H . . . . . . . . . . . . . . . . . . . . . .Part 2—Direct Skips. Gifts that are direct skips and are subject to both gift tax and generation-skipping transfer tax. You must list the gifts in chronological order.


A Item

number


C 2632(b) election

out

D Donor’s adjusted

basis of gift

E Date of gift

F Value at

date of gift

G For split

gifts, enter 1/2 of

column F

H Net transfer


col. F)

Total of Part 2. Add amounts from Part 2, column H . . . . . . . . . . . . . . . . . . . . . .Part 3—Indirect Skips. Gifts to trusts that are currently subject to gift tax and may later be subject to generation-skipping transfer tax. Youmust list these gifts in chronological order.


A Item

number


C 2632(c) election

D Donor’s adjusted

basis of gift

E Date of gift

F Value at

date of gift

G For split

gifts, enter 1/2 of

column F

H Net transfer


col. F)

Total of Part 3. Add amounts from Part 3, column H . . . . . . . . . . . . . . . . . . . . . .(If more space is needed, attach additional statements.) Form 709 (2016)



Form 709 (2016) Page 3 Part 4—Taxable Gift Reconciliation

1 Total value of gifts of donor. Add totals from column H of Parts 1, 2, and 3 . . . . . . . . . . 1 2 Total annual exclusions for gifts listed on line 1 (see instructions) . . . . . . . . . . . . . 2 3 Total included amount of gifts. Subtract line 2 from line 1 . . . . . . . . . . . . . . . 3

Deductions (see instructions) 4 Gifts of interests to spouse for which a marital deduction will be claimed, based

on item numbers of Schedule A . . 4 5 Exclusions attributable to gifts on line 4 . . . . . . . . . . . . 5 6 Marital deduction. Subtract line 5 from line 4 . . . . . . . . . . . 6 7 Charitable deduction, based on item nos. less exclusions . 7 8 Total deductions. Add lines 6 and 7 . . . . . . . . . . . . . . . . . . . . . 8 9 Subtract line 8 from line 3 . . . . . . . . . . . . . . . . . . . . . . . . 9

10 Generation-skipping transfer taxes payable with this Form 709 (from Schedule D, Part 3, col. H, Total) . . 10 11 Taxable gifts. Add lines 9 and 10. Enter here and on page 1, Part 2—Tax Computation, line 1 . . . . 11

Terminable Interest (QTIP) Marital Deduction. (see instructions for Schedule A, Part 4, line 4) If a trust (or other property) meets the requirements of qualified terminable interest property under section 2523(f), and:

a. The trust (or other property) is listed on Schedule A, and

b. The value of the trust (or other property) is entered in whole or in part as a deduction on Schedule A, Part 4, line 4, then the donor shall be deemed to have made an election to have such trust (or other property) treated as qualified terminable interest property under section 2523(f).

If less than the entire value of the trust (or other property) that the donor has included in Parts 1 and 3 of Schedule A is entered as a deduction on line 4, the donor shall be considered to have made an election only as to a fraction of the trust (or other property). The numerator of this fraction is equal to the amount of the trust (or other property) deducted on Schedule A, Part 4, line 6. The denominator is equal to the total value of the trust (or other property) listed in Parts 1 and 3 of Schedule A.

If you make the QTIP election, the terminable interest property involved will be included in your spouse’s gross estate upon his or her death (section 2044). See instructions for line 4 of Schedule A. If your spouse disposes (by gift or otherwise) of all or part of the qualifying life income interest, he or she will be considered to have made a transfer of the entire property that is subject to the gift tax. See Transfer of Certain Life Estates Received From Spouse in the instructions.

12 Election Out of QTIP Treatment of Annuities

Check here if you elect under section 2523(f)(6) not to treat as qualified terminable interest property any joint and survivor annuities that are reported on Schedule A and would otherwise be treated as qualified terminable interest property under section 2523(f). See instructions. Enter the item numbers from Schedule A for the annuities for which you are making this election

SCHEDULE B Gifts From Prior Periods If you answered “Yes,” on line 11a of page 1, Part 1, see the instructions for completing Schedule B. If you answered “No,” skip to the Tax Computation on page 1 (or Schedules C or D, if applicable). Complete Schedule A before beginning Schedule B. See instructions for recalculation of the column C amounts. Attach calculations.

A Calendar year or calendar quarter (see instructions)

B Internal Revenue o�ce

where prior return was filed

C Amount of applicable credit (unified credit)

against gift tax for periods after

December 31, 1976

D Amount of specific exemption for prior

periods ending before January 1, 1977

E Amount of

taxable gifts

1 Totals for prior periods . . . . . . . . . . . . 1

2 Amount, if any, by which total specific exemption, line 1, column D is more than $30,000 . . . . . . 2 3 Total amount of taxable gifts for prior periods. Add amount on line 1, column E and amount, if any, on line 2.

Enter here and on page 1, Part 2—Tax Computation, line 2 . . . . . . . . . . . . . . . 3 (If more space is needed, attach additional statements.) Form 709 (2016)



Form 709 (2016), schedule a, Part 1

A B C D E F G H

1 Billy Brown, son, cash $ 80,000 2016 $ 80,000 $40,000 $ 40,000

2 Betsy Brown, daughter, jewelry 18,000 2016 30,000 15,000 15,000

3 Ruth Cain, friend, remainder interest in vacation cabin (0.46310 3 100,000) 15,000 2016 46,310 23,155 23,155

4 Trust at First Bank, income to Hugh Brown, spouse, for life. Remainder to Jeff Bass, brother, (QTIP trust) 480,000 2016 600,000 -0- 600,000

$593,000 $756,310 $78,155 $678,155Note: To save space, addresses are not shown here.



Form 706(Rev. August 2013)


United States Estate (and Generation-Skipping Transfer) Tax Return

Estate of a citizen or resident of the United States (see instructions). To be filed for decedents dying after December 31, 2012.


OMB No. 1545-0015

Par

t 1—

Dec

eden

t an

d E

xecu

tor

1a Decedent’s first name and middle initial (and maiden name, if any) 1b Decedent’s last name 2 Decedent’s social security no.

3a City, town, or post o�ce; county; state or province; country; and ZIP or foreign postal code.

3b Year domicile established 4 Date of birth 5 Date of death

6a Name of executor (see instructions)

6b Executor’s address (number and street including apartment or suite no.; city, town, or post o�ce; state or province; country; and ZIP or foreign postal code) and phone no.

Phone no.

6c Executor’s social security number (see instructions)

6d If there are multiple executors, check here and attach a list showing the names, addresses, telephone numbers, and SSNs of the additional executors. 7a Name and location of court where will was probated or estate administered 7b Case number

8 If decedent died testate, check here and attach a certified copy of the will. 9 If you extended the time to file this Form 706, check here 10 If Schedule R-1 is attached, check here 11 If you are estimating the value of assets included in the gross estate on line 1 pursuant to the special rule of Reg. section 20.2010-2T(a) (7)(ii), check here

Par

t 2—

Tax

Co

mp

utat

ion

1 Total gross estate less exclusion (from Part 5—Recapitulation, item 13) . . . . . . . . . . 12 Tentative total allowable deductions (from Part 5—Recapitulation, item 24) . . . . . . . . . 23a Tentative taxable estate (subtract line 2 from line 1) . . . . . . . . . . . . . . . . 3ab State death tax deduction . . . . . . . . . . . . . . . . . . . . . . . 3bc Taxable estate (subtract line 3b from line 3a) . . . . . . . . . . . . . . . . . . 3c

4 Adjusted taxable gifts (see instructions) . . . . . . . . . . . . . . . . . . . 45 Add lines 3c and 4 . . . . . . . . . . . . . . . . . . . . . . . . . 56 Tentative tax on the amount on line 5 from Table A in the instructions . . . . . . . . . . 67 Total gift tax paid or payable (see instructions) . . . . . . . . . . . . . . . . . 78 Gross estate tax (subtract line 7 from line 6) . . . . . . . . . . . . . . . . . . 89a Basic exclusion amount . . . . . . . . . . . . . . . 9a

9b Deceased spousal unused exclusion (DSUE) amount from predeceased spouse(s), if any (from Section D, Part 6—Portability of Deceased Spousal Unused Exclusion). . 9b

9c Applicable exclusion amount (add lines 9a and 9b) . . . . . . . 9c

9d Applicable credit amount (tentative tax on the amount in 9c from Table A in the instructions) . . . . . . . . . . . . . . . . 9d

10 Adjustment to applicable credit amount (May not exceed $6,000. See instructions.) . . . . . . . . . . . . . . . . . . 10

11 Allowable applicable credit amount (subtract line 10 from line 9d) . . . . . . . . . . . 1112 Subtract line 11 from line 8 (but do not enter less than zero) . . . . . . . . . . . . . 1213 Credit for foreign death taxes (from Schedule P). (Attach Form(s) 706-CE.) 1314 Credit for tax on prior transfers (from Schedule Q) . . . . . . . 1415 Total credits (add lines 13 and 14) . . . . . . . . . . . . . . . . . . . . . 1516 Net estate tax (subtract line 15 from line 12) . . . . . . . . . . . . . . . . . . 1617 Generation-skipping transfer (GST) taxes payable (from Schedule R, Part 2, line 10) . . . . . . 1718 Total transfer taxes (add lines 16 and 17) . . . . . . . . . . . . . . . . . . . 1819 Prior payments (explain in an attached statement) . . . . . . . . . . . . . . . . 1920 Balance due (or overpayment) (subtract line 19 from line 18) . . . . . . . . . . . . . 20

Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer other than the executor is based on all information of which preparer has any knowledge.

Sign Here

Signature of executor Date

Signature of executor Date



PTIN

Firm’s name

Firm’s address

Firm's EIN

Phone no.

For Privacy Act and Paperwork Reduction Act Notice, see instructions. Cat. No. 20548R Form 706 (Rev. 8-2013)



Mary Wilson, CPA

Form 706 (Rev. 8-2013)

Estate of:Decedent’s social security number

Part 3—Elections by the ExecutorNote. For information on electing portability of the decedent's DSUE amount, including how to opt out of the election, see Part 6—

Portability of Deceased Spousal Unused Exclusion. Note. Some of the following elections may require the posting of bonds or liens. Yes NoPlease check "Yes" or "No" box for each question (see instructions).

1 Do you elect alternate valuation? . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Do you elect special-use valuation? If “Yes,” you must complete and attach Schedule A-1 . . . . . . . . . . 2

3 Do you elect to pay the taxes in installments as described in section 6166? . . . . . . . . . . . . . . .If “Yes,” you must attach the additional information described in the instructions. Note. By electing section 6166 installment payments, you may be required to provide security for estate tax deferred under section 6166 and interest in the form of a surety bond or a section 6324A lien. 3

4 Do you elect to postpone the part of the taxes due to a reversionary or remainder interest as described in section 6163? . 4Part 4—General InformationNote. Please attach the necessary supplemental documents. You must attach the death certificate. (See instructions)

Authorization to receive confidential tax information under Reg. section 601.504(b)(2)(i); to act as the estate’s representative before the IRS; and to make written or oral presentations on behalf of the estate:

Name of representative (print or type) State Address (number, street, and room or suite no., city, state, and ZIP code)

I declare that I am the attorney/ certified public accountant/ enrolled agent (check the applicable box) for the executor. I am not under suspension or

disbarment from practice before the Internal Revenue Service and am qualified to practice in the state shown above.Signature CAF number Date Telephone number

1 Death certificate number and issuing authority (attach a copy of the death certificate to this return).

2 Decedent’s business or occupation. If retired, check here and state decedent’s former business or occupation.

3a Marital status of the decedent at time of death:Married Widow/widower Single Legally separated Divorced

3b For all prior marriages, list the name and SSN of the former spouse, the date the marriage ended, and whether the marriage ended by annulment, divorce, or death. Attach additional statements of the same size if necessary.

4a Surviving spouse’s name 4b Social security number 4c Amount received (see instructions)

5 Individuals (other than the surviving spouse), trusts, or other estates who receive benefits from the estate (do not include charitable beneficiaries shown in Schedule O) (see instructions).

Name of individual, trust, or estate receiving $5,000 or more Identifying number Relationship to decedent Amount (see instructions)

All unascertainable beneficiaries and those who receive less than $5,000 . . . . . . . . . . . . . . .Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

If you answer “Yes” to any of the following questions, you must attach additional information as described. Yes No6 Is the estate filing a protective claim for refund? . . . . . . . . . . . . . . . . . . . . . . . .

If “Yes,” complete and attach two copies of Schedule PC for each claim.

7 Does the gross estate contain any section 2044 property (qualified terminable interest property (QTIP) from a prior gift or estate)? (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8 a Have federal gift tax returns ever been filed? . . . . . . . . . . . . . . . . . . . . . . . . .If “Yes,” attach copies of the returns, if available, and furnish the following information:

b Period(s) covered c Internal Revenue o�ce(s) where filed

9a Was there any insurance on the decedent’s life that is not included on the return as part of the gross estate? . . . . . .b Did the decedent own any insurance on the life of another that is not included in the gross estate? . . . . . . . . .

Page 2



X

Herman Estes XXX XXXXXX

X

X

X

X

XX

X

X

XX

X

325,0004,400,000

94,250200,000220,000

487,200

240,000

5,966,450

5,966,450

85,00031,700

116,700116,700

1,070,00010,000

1,196,700

Form 706 (Rev. 8-2013)


Part 4—General Information (continued)If you answer “Yes” to any of the following questions, you must attach additional information as described. Yes No

10 Did the decedent at the time of death own any property as a joint tenant with right of survivorship in which (a) one or more of the other joint tenants was someone other than the decedent’s spouse, and (b) less than the full value of the property is included on the return as part of the gross estate? If “Yes,” you must complete and attach Schedule E . . . . . . . . . . .

11 a Did the decedent, at the time of death, own any interest in a partnership (for example, a family limited partnership), an unincorporated business, or a limited liability company; or own any stock in an inactive or closely held corporation? . . . .

b If “Yes,” was the value of any interest owned (from above) discounted on this estate tax return? If “Yes,” see the instructions on reporting the total accumulated or e�ective discounts taken on Schedule F or G . . . . . . . . . . . . . .

12 Did the decedent make any transfer described in sections 2035, 2036, 2037, or 2038? (see instructions) If “Yes,” you must complete and attach Schedule G . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13a Were there in existence at the time of the decedent’s death any trusts created by the decedent during his or her lifetime? . .

b Were there in existence at the time of the decedent’s death any trusts not created by the decedent under which the decedent possessed any power, beneficial interest, or trusteeship? . . . . . . . . . . . . . . . . . . . . .

c Was the decedent receiving income from a trust created after October 22, 1986, by a parent or grandparent? . . . . . .If “Yes,” was there a GST taxable termination (under section 2612) on the death of the decedent? . . . . . . . . .

d If there was a GST taxable termination (under section 2612), attach a statement to explain. Provide a copy of the trust or will creating the trust, and give the name, address, and phone number of the current trustee(s).

e Did the decedent at any time during his or her lifetime transfer or sell an interest in a partnership, limited liability company, or closely held corporation to a trust described in lines 13a or 13b? . . . . . . . . . . . . . . . . . . .If “Yes,” provide the EIN for this transferred/sold item.

14 Did the decedent ever possess, exercise, or release any general power of appointment? If “Yes,” you must complete and attach Schedule H . . . .

15 Did the decedent have an interest in or a signature or other authority over a financial account in a foreign country, such as a bank account, securities account, or other financial account? . . . . . . . . . . . . . . . . . . . . .

16 Was the decedent, immediately before death, receiving an annuity described in the “General” paragraph of the instructions for Schedule I or a private annuity? If “Yes,” you must complete and attach Schedule I . . . . . . . . . . . . .

17 Was the decedent ever the beneficiary of a trust for which a deduction was claimed by the estate of a predeceased spouse under section 2056(b)(7) and which is not reported on this return? If “Yes,” attach an explanation . . . . . . . . .

Part 5—Recapitulation. Note. If estimating the value of one or more assets pursuant to the special rule of Reg. section 20.2010-2T(a)(7)(ii), enter on both lines 10 and 23 the amount noted in the instructions for the corresponding range of values. (See instructions for details.)Item no. Gross estate Alternate value Value at date of death

1 Schedule A—Real Estate . . . . . . . . . . . . . . . . 12 Schedule B—Stocks and Bonds . . . . . . . . . . . . . . 23 Schedule C—Mortgages, Notes, and Cash . . . . . . . . . . . 34 Schedule D—Insurance on the Decedent’s Life (attach Form(s) 712) . . . . 45 Schedule E—Jointly Owned Property (attach Form(s) 712 for life insurance) . 56 Schedule F—Other Miscellaneous Property (attach Form(s) 712 for life insurance) 67 Schedule G—Transfers During Decedent’s Life (att. Form(s) 712 for life insurance) 78 Schedule H—Powers of Appointment . . . . . . . . . . . . 89 Schedule I—Annuities . . . . . . . . . . . . . . . . . 910 Estimated value of assets subject to the special rule of Reg. section 20.2010-2T(a)(7)(ii) 1011 Total gross estate (add items 1 through 10) . . . . . . . . . . . 1112 Schedule U—Qualified Conservation Easement Exclusion . . . . . . 12

13 Total gross estate less exclusion (subtract item 12 from item 11). Enter here and on line 1 of Part 2—Tax Computation . . . . . . . . . . . . . 13

Item no. Deductions Amount

14 Schedule J—Funeral Expenses and Expenses Incurred in Administering Property Subject to Claims . . . . . 1415 Schedule K—Debts of the Decedent . . . . . . . . . . . . . . . . . . . . . 1516 Schedule K—Mortgages and Liens . . . . . . . . . . . . . . . . . . . . . 1617 Total of items 14 through 16 . . . . . . . . . . . . . . . . . . . . . . . 1718 Allowable amount of deductions from item 17 (see the instructions for item 18 of the Recapitulation) . . . . . 1819 Schedule L—Net Losses During Administration . . . . . . . . . . . . . . . . . . 1920 Schedule L—Expenses Incurred in Administering Property Not Subject to Claims . . . . . . . . 2021 Schedule M—Bequests, etc., to Surviving Spouse . . . . . . . . . . . . . . . . . 21

22 Schedule O—Charitable, Public, and Similar Gifts and Bequests . . . . . . . . . . . . . 2223 Estimated value of deductible assets subject to the special rule of Reg. section 20.2010-2T(a)(7)(ii) . . . 2324 Tentative total allowable deductions (add items 18 through 23). Enter here and on line 2 of the Tax Computation 24

Page 3



Herman Estes

Personal residence, house and lot, located at1105 Elm Court, City, ST

XXX XX XXXX

325,000

325,000

Form 706 (Rev. 8-2013)


SCHEDULE A—Real Estate• For jointly owned property that must be disclosed on Schedule E, see instructions.• Real estate that is part of a sole proprietorship should be shown on Schedule F.• Real estate that is included in the gross estate under sections 2035, 2036, 2037, or 2038 should be shown on Schedule G.• Real estate that is included in the gross estate under section 2041 should be shown on Schedule H.• If you elect section 2032A valuation, you must complete Schedule A and Schedule A-1.

Note. If the value of the gross estate, together with the amount of adjusted taxable gifts, is less than the basic exclusion amount and the Form 706 is being filed solely to elect portability of the DSUE amount, consideration should be given as to whether you are required to report the value of assets eligible for the marital or charitable deduction on this schedule. See the instructions and Reg. section 20.2010-2T(a)(7)(ii) for more information. If you are not required to report the value of an asset, identify the property but make no entries in the last three columns.

Item number Description Alternate

valuation date Alternate value Value at date of death

Total from continuation schedules or additional statements attached to this schedule . . .TOTAL. (Also enter on Part 5—Recapitulation, page 3, at item 1.) . . . . . . . . .

(If more space is needed, attach the continuation schedule from the end of this package or additional statements of the same size.)

Schedule A—Page 5



Herman Estes

Stock in Ajax Corporation11,000 shares, $10 per share 4,400 4,400,000

4,400,000

XXX XX XXXX

Form 706 (Rev. 8-2013)


SCHEDULE B—Stocks and Bonds(For jointly owned property that must be disclosed on Schedule E, see instructions.)

Note. If the value of the gross estate, together with the amount of adjusted taxable gifts, is less than the basic exclusion amount and the Form 706 is being filed solely to elect portability of the DSUE amount, consideration should be given as to whether you are required to report the value of assets eligible for the marital or charitable deduction on this schedule. See the instructions and Reg. section 20.2010-2T(a)(7)(ii) for more information. If you are not required to report the value of an asset, identify the property but make no entries in the last four columns.

Item number

Description, including face amount of bonds or number of shares and par value for identification. Give CUSIP number. If trust, partnership, or closely held entity, give EIN.

Unit value Alternate valuation date Alternate value Value at

date of death

CUSIP number or EIN, where applicable

Total from continuation schedules (or additional statements) attached to this schedule . . .TOTAL. (Also enter on Part 5—Recapitulation, page 3, at item 2.) . . . . . . . . . .


Schedule B—Page 10



Form 706 (Rev. 8-2013)


SCHEDULE C—Mortgages, Notes, and Cash(For jointly owned property that must be disclosed on Schedule E, see instructions.)




Total from continuation schedules (or additional statements) attached to this schedule . .TOTAL. (Also enter on Part 5—Recapitulation, page 3, at item 3.) . . . . . . . . .


Schedule C—Page 11



Life insurance policy No. 123-A issued by the1Life Insurance Company of Ohio.Beneficiary — Johnny Estes

Herman Estes

200,000

200,000

XXX XX XXXX

Form 706 (Rev. 8-2013)


SCHEDULE D—Insurance on the Decedent’s LifeYou must list all policies on the life of the decedent and attach a Form 712 for each policy.






Schedule D—Page 12



Land1

1

Herman Estes

440,000

440,000220,000

220,000

XXX XX XXXX

Form 706 (Rev. 8-2013)


PART 1. Qualified Joint Interests—Interests Held by the Decedent and His or Her Spouse as the Only Joint Tenants (Section 2040(b)(2))

SCHEDULE E—Jointly Owned Property (If you elect section 2032A valuation, you must complete Schedule E and Schedule A-1.)


Item number

Description. For securities, give CUSIP number. If trust, partnership, or closely held entity, give EIN.

Alternate valuation date Alternate value Value at

date of death


Total from continuation schedules (or additional statements) attached to this schedule . . . . .1a Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . 1a1b Amounts included in gross estate (one-half of line 1a) . . . . . . . . . . . . . 1b

PART 2. All Other Joint Interests

2a State the name and address of each surviving co-tenant. If there are more than three surviving co-tenants, list the additional co-tenants on an attached statement.

Name Address (number and street, city, state, and ZIP code)

A.

B.

C.

Item number

Enter letter for

co-tenant

Description (including alternate valuation date if any). For securities, give CUSIP number. If trust, partnership, or closely held entity, give EIN Percentage includible Includible alternate

valueIncludible value at

date of death


Total from continuation schedules (or additional statements) attached to this schedule . . . . .2b Total other joint interests . . . . . . . . . . . . . . . . . . . . . 2b

3 Total includible joint interests (add lines 1b and 2b). Also enter on Part 5—Recapitulation, page 3, at item 5 . . . . . . . . . . . . . . . . . . . . . . . . . 3

(If more space is needed, attach the continuation schedule from the end of this package or additional statements of the same size.)Schedule E—Page 13



1

Herman Estes

487,200

487,200

XXX XX XXXXEstate of:Decedent’s social security number

SCHEDULE G—Transfers During Decedent’s Life(If you elect section 2032A valuation, you must complete Schedule G and Schedule A-1.)


Item number

Description. For securities, give CUSIP number. If trust, partnership, or closely held entity, give EIN

Alternate valuation date Alternate value Value at

date of death

A. Gift tax paid or payable by the decedent or the estate for all gifts made by the decedent or his or her spouse within 3 years before thedecedent’s death (section 2035(b)) . . . . . . . . . . . . X X X X X

B. Transfers includible under sections 2035(a), 2036, 2037, or 2038:


SCHEDULE H—Powers of Appointment (Include “5 and 5 lapsing” powers (section 2041(b)(2)) held by the decedent.)

(If you elect section 2032A valuation, you must complete Schedule H and Schedule A-1.)


Item number Description Alternate valuation

date Alternate value Value at date of death

Total from continuation schedules (or additional statements) attached to this schedule . . .TOTAL. (Also enter on Part 5—Recapitulation, page 3, at item 8.) . . . . . . . . . .


Schedules G and H—Page 15

Form 706 (Rev. 8-2013)



Qualified pension plan issued by BuckeyeCorporation. Beneficiary — Ann Estes, spouse 240,000

240,000

X

Herman Estes XXX XX XXXX

1

Form 706 (Rev. 8-2013)


SCHEDULE I—Annuities

Note. Generally, no exclusion is allowed for the estates of decedents dying after December 31, 1984 (see instructions).


A Are you excluding from the decedent’s gross estate the value of a lump-sum distribution described in section 2039(f)(2) (as in e�ect before its repeal by the Deficit Reduction Act of 1984)? . . . . . . . . . . . . .

Yes No

If “Yes,” you must attach the information required by the instructions.Item

numberDescription.

Show the entire value of the annuity before any exclusionsAlternate valuation

dateIncludible alternate

valueIncludible value at

date of death



Schedule I—Page 16



Herman Estes

15,000

15,000

70,000

85,000

XXX XX XXXX

Form 706 (Rev. 8-2013)


SCHEDULE J—Funeral Expenses and Expenses Incurred in Administering Property Subject to Claims Use Schedule PC to make a protective claim for refund due to an expense not currently deductible.

For such a claim, report the expense on Schedule J but without a value in the last column.

Note. Do not list expenses of administering property not subject to claims on this schedule. To report those expenses, see instructions.

If executors’ commissions, attorney fees, etc., are claimed and allowed as a deduction for estate tax purposes, they are not allowable as a deduction in computing the taxable income of the estate for federal income tax purposes. They are allowable as an income tax deduction on Form 1041, U.S. Income Tax Return for Estates and Trusts, if a waiver is filed to forgo the deduction on Form 706 (see Instructions for Form 1041).

Item number Description Expense amount Total amount

A. Funeral expenses:

Total funeral expenses . . . . . . . . . . . . . . . . . .

B. Administration expenses:1 Executors’ commissions—amount estimated/agreed upon/paid. (Strike out the words that do not

apply.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Attorney fees—amount estimated/agreed upon/paid. (Strike out the words that do not apply.) . .3 Accountant fees—amount estimated/agreed upon/paid. (Strike out the words that do not apply.) .

4 Miscellaneous expenses:Expense amount

Total miscellaneous expenses from continuation schedules (or additional statements) attached to this schedule . . . . . . . . . . . . . . . . . . . . .Total miscellaneous expenses . . . . . . . . . . . . . . . . . . . . . . . .

TOTAL. (Also enter on Part 5—Recapitulation, page 3, at item 14.) . . . . . . . . . . . . .(If more space is needed, attach the continuation schedule from the end of this package or additional statements of the same size.)

Schedule J—Page 17

Are you aware of any actual or potential reimbursement to the estate for any expense claimed as a deduction on this schedule? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Yes No

If “Yes,” attach a statement describing the expense(s) subject to potential reimbursement. (see instructions)



Herman Estes

Bank loan (including $200 interest accruedthrough date of death)

American Express, Visa, andMaster Card credit card debts

2

125,200

6,500

31,700

XXX XX XXXX

Form 706 (Rev. 8-2013)


SCHEDULE K—Debts of the Decedent, and Mortgages and Liens Use Schedule PC to make a protective claim for refund due to a claim not currently deductible.

For such a claim, report the expense on Schedule K but without a value in the last column.

Item number

Debts of the Decedent—Creditor and nature of debt, and allowable death taxes Amount

Total from continuation schedules (or additional statements) attached to this schedule . . . . . . .TOTAL. (Also enter on Part 5—Recapitulation, page 3, at item 15.) . . . . . . . . . . . . .

Item number Mortgages and Liens—Description Amount

Total from continuation schedules (or additional statements) attached to this schedule . . . . . . .TOTAL. (Also enter on Part 5—Recapitulation, page 3, at item 16.) . . . . . . . . . . . . .


Schedule K—Page 18

Are you aware of any actual or potential reimbursement to the estate for any debt of the decedent, mortgage, or lien claimed as a deduction on this schedule? . . . . . . . . . . . . . . . . . . . . . . . . .

Yes No

If “Yes,” attach a statement describing the items subject to potential reimbursement. (see instructions)Are any of the items on this schedule deductible under Reg. section 20.2053-4(b) and Reg. section 20.2053-4(c)? . .If “Yes,” attach a statement indicating the applicable provision and documenting the value of the claim.

X

X



Herman Estes

X

X

X

United States3-12-1948

N/AN/A

Residence

Checking accountSavings account

Land held in joint tenancyQualified pension plan

Trust with First Bank as trustee

325,000

10,00075,000

220,000240,000

200,000

1,070,000

1,070,000

XXX XX XXXX

Form 706 (Rev. 8-2013)


SCHEDULE M—Bequests, etc., to Surviving SpouseNote. If the value of the gross estate, together with the amount of adjusted taxable gifts, is less than the basic exclusion amount and the Form 706 is being filed solely to elect portability of the DSUE amount, consideration should be given as to whether you are required to report the value of assets eligible for the marital or charitable deduction on this schedule. See the instructions and Reg. section 20.2010-2T(a)(7)(ii) for more information. If you are not required to report the value of an asset, identify the property but make no entry in the last column.

Yes No1 Did any property pass to the surviving spouse as a result of a qualified disclaimer? . . . . . . . . 1

If ‘‘Yes,’’ attach a copy of the written disclaimer required by section 2518(b).2a In what country was the surviving spouse born?

b What is the surviving spouse’s date of birth?c Is the surviving spouse a U.S. citizen? . . . . . . . . . . . . . . . . . . . . . . . 2cd If the surviving spouse is a naturalized citizen, when did the surviving spouse acquire citizenship?e If the surviving spouse is not a U.S. citizen, of what country is the surviving spouse a citizen?

3 Election Out of QTIP Treatment of Annuities. Do you elect under section 2056(b)(7)(C)(ii) not to treat as qualifiedterminable interest property any joint and survivor annuities that are included in the gross estate and would otherwise be treated as qualified terminable interest property under section 2056(b)(7)(C)? (see instructions) . . 3

Item number

Description of property interests passing to surviving spouse. For securities, give CUSIP number. If trust, partnership, or closely held entity, give EIN Amount

QTIP property:

All other property:

Total from continuation schedules (or additional statements) attached to this schedule . . . . . . . .4 Total amount of property interests listed on Schedule M . . . . . . . . . . . . . . . 45a Federal estate taxes payable out of property interests listed on Schedule M . . . 5a

b Other death taxes payable out of property interests listed on Schedule M . . . . 5bc Federal and state GST taxes payable out of property interests listed on Schedule M 5cd Add items 5a, 5b, and 5c . . . . . . . . . . . . . . . . . . . . . . . . . 5d

6 Net amount of property interests listed on Schedule M (subtract 5d from 4). Also enter on Part 5—Recapitulation, page 3, at item 21 . . . . . . . . . . . . . . . . . . . . . . . 6


Schedule M—Page 20



Herman Estes

X

X

X

American Cancer Society Charity 10,000

10,000

10,000

1

XXX XX XXXX

Form 706 (Rev. 8-2013)


SCHEDULE O—Charitable, Public, and Similar Gifts and Bequests

Note. If the value of the gross estate, together with the amount of adjusted taxable gifts, is less than the basic exclusion amount and the Form 706 is being filed solely to elect portability of the DSUE amount, consideration should be given as to whether you are required to report the value of assets eligible for the marital or charitable deduction on this schedule. See the instructions and Reg. section 20.2010-2T(a)(7)(ii) for more information. If you are not required to report the value of an asset, identify the property but make no entry in the last column.

Yes No

1 a If the transfer was made by will, has any action been instituted to contest or have interpreted any of its provisions a�ecting the charitable deductions claimed in this schedule? . . . . . . . . . . . . . . . . . .If ‘‘Yes,’’ full details must be submitted with this schedule.

b According to the information and belief of the person or persons filing this return, is any such action planned? .If ‘‘Yes,’’ full details must be submitted with this schedule.

2 Did any property pass to charity as the result of a qualified disclaimer? . . . . . . . . . . . . . .If ‘‘Yes,’’ attach a copy of the written disclaimer required by section 2518(b).

Item number Name and address of beneficiary Character of institution Amount

Total from continuation schedules (or additional statements) attached to this schedule . . . . . . . . . .

3 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

4a Federal estate tax payable out of property interests listed above . . . . . 4a

b Other death taxes payable out of property interests listed above . . . . . 4b

c Federal and state GST taxes payable out of property interests listed above . 4c

d Add items 4a, 4b, and 4c . . . . . . . . . . . . . . . . . . . . . . . . . 4d

5 Net value of property interests listed above (subtract 4d from 3). Also enter on Part 5—Recapitulation, page 3, at item 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5


Schedule O—Page 21



Karen Certi�ed

Form 1041 Department of the Treasury—Internal Revenue Service

U.S. Income Tax Return for Estates and Trusts 16 OMB No. 1545-0092

For calendar year 2016 or fiscal year beginning , 2016, and ending , 20 Name of estate or trust (If a grantor type trust, see the instructions.)

Name and title of fiduciary

Number, street, and room or suite no. (If a P.O. box, see the instructions.)


Information about Form 1041 and its separate instructions is at www.irs.gov/form1041.A Check all that apply:

Decedent’s estate

Simple trust

Complex trust

Qualified disability trust

ESBT (S portion only)

Grantor type trust

Bankruptcy estate-Ch. 7


Pooled income fundB Number of Schedules K-1

attached (see instructions)

C Employer identification number

D Date entity created

E Nonexempt charitable and split- interest trusts, check applicable box(es), see instructions.

Described in sec. 4947(a)(1). Check here

if not a private foundation . . .

Described in sec. 4947(a)(2)F Check

applicable boxes:

Initial return Final return Amended return Net operating loss carryback

Change in trust's name Change in fiduciary Change in fiduciary's name Change in fiduciary's address

G Check here if the estate or filing trust made a section 645 election . . . . . .

Inco

me

1 Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2a Total ordinary dividends . . . . . . . . . . . . . . . . . . . . . . . . 2a b Qualified dividends allocable to: (1) Beneficiaries (2) Estate or trust

3 Business income or (loss). Attach Schedule C or C-EZ (Form 1040) . . . . . . . . . 3 4 Capital gain or (loss). Attach Schedule D (Form 1041) . . . . . . . . . . . . . . 4 5 Rents, royalties, partnerships, other estates and trusts, etc. Attach Schedule E (Form 1040) . 5 6 Farm income or (loss). Attach Schedule F (Form 1040) . . . . . . . . . . . . . . 6 7 Ordinary gain or (loss). Attach Form 4797 . . . . . . . . . . . . . . . . . . 7 8 Other income. List type and amount 8 9 Total income. Combine lines 1, 2a, and 3 through 8 . . . . . . . . . . . . . 9

Ded

uctio

ns

10 Interest. Check if Form 4952 is attached . . . . . . . . . . . . . . . 10 11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 12 Fiduciary fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 13 Charitable deduction (from Schedule A, line 7) . . . . . . . . . . . . . . . . 13 14 Attorney, accountant, and return preparer fees . . . . . . . . . . . . . . . . 14 15 a Other deductions not subject to the 2% floor (attach schedule) . . . . . . . . . . . 15a

b Net operating loss deduction. See instructions . . . . . . . . . . . . . . . . 15b c Allowable miscellaneous itemized deductions subject to the 2% floor . . . . . . . . . 15c

16 Add lines 10 through 15c . . . . . . . . . . . . . . . . . . . . . . 16 17 Adjusted total income or (loss). Subtract line 16 from line 9 . . . 17 18 Income distribution deduction (from Schedule B, line 15). Attach Schedules K-1 (Form 1041) 18 19 Estate tax deduction including certain generation-skipping taxes (attach computation) . . . 19 20 Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 21 Add lines 18 through 20 . . . . . . . . . . . . . . . . . . . . . . . 21

Tax

and

Pay

men

ts

22 Taxable income. Subtract line 21 from line 17. If a loss, see instructions . . . . . . . . 22 23 Total tax (from Schedule G, line 7) . . . . . . . . . . . . . . . . . . . . 23 24 Payments: a 2016 estimated tax payments and amount applied from 2015 return . . . . 24a

b Estimated tax payments allocated to beneficiaries (from Form 1041-T) . . . . . . . . 24b c Subtract line 24b from line 24a . . . . . . . . . . . . . . . . . . . . . 24c d Tax paid with Form 7004. See instructions . . . . . . . . . . . . . . . . . 24d e Federal income tax withheld. If any is from Form(s) 1099, check . . . . . . . . 24e

Other payments: f Form 2439 ; g Form 4136 ; Total 24h 25 Total payments. Add lines 24c through 24e, and 24h . . . . . . . . . . . . . 25 26 Estimated tax penalty. See instructions . . . . . . . . . . . . . . . . . . . 26 27 Tax due. If line 25 is smaller than the total of lines 23 and 26, enter amount owed . . . . . 27 28 Overpayment. If line 25 is larger than the total of lines 23 and 26, enter amount overpaid . . 28 29 Amount of line 28 to be: a Credited to 2017 estimated tax ; b Refunded 29

Sign Here


Signature of fiduciary or o�cer representing fiduciary Date EIN of fiduciary if a financial institution

May the IRS discuss this return with the preparer shown below (see instr.)? Yes No



PTIN

Firm’s name

Firm's address

Firm's EIN

Phone no.

For Paperwork Reduction Act Notice, see the separate instructions. Cat. No. 11370H Form 1041 (2016)

Trust TIN



Form 1041 (2016) Page 2 Schedule A Charitable Deduction. Don't complete for a simple trust or a pooled income fund. 1 Amounts paid or permanently set aside for charitable purposes from gross income. See instructions . 1 2 Tax-exempt income allocable to charitable contributions. See instructions . . . . . . . . 2 3 Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . 3 4 Capital gains for the tax year allocated to corpus and paid or permanently set aside for charitable purposes 4 5 Add lines 3 and 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 6 Section 1202 exclusion allocable to capital gains paid or permanently set aside for charitable purposes. See instructions . 6 7 Charitable deduction. Subtract line 6 from line 5. Enter here and on page 1, line 13 . . . . . 7

Schedule B Income Distribution Deduction 1 Adjusted total income. See instructions . . . . . . . . . . . . . . . . . . . . 1 2 Adjusted tax-exempt interest . . . . . . . . . . . . . . . . . . . . . . . 2 3 Total net gain from Schedule D (Form 1041), line 19, column (1). See instructions . . . . . . 3 4 Enter amount from Schedule A, line 4 (minus any allocable section 1202 exclusion) . . . . . 4 5 Capital gains for the tax year included on Schedule A, line 1. See instructions . . . . . . . 5 6 Enter any gain from page 1, line 4, as a negative number. If page 1, line 4, is a loss, enter the loss as a positive number . 6 7 Distributable net income. Combine lines 1 through 6. If zero or less, enter -0- . . . . . . . 7 8 If a complex trust, enter accounting income for the tax year as

determined under the governing instrument and applicable local law . 8 9 Income required to be distributed currently . . . . . . . . . . . . . . . . . . . 9

10 Other amounts paid, credited, or otherwise required to be distributed . . . . . . . . . . 10 11 Total distributions. Add lines 9 and 10. If greater than line 8, see instructions . . . . . . . 11 12 Enter the amount of tax-exempt income included on line 11 . . . . . . . . . . . . . 12 13 Tentative income distribution deduction. Subtract line 12 from line 11 . . . . . . . . . . 13 14 Tentative income distribution deduction. Subtract line 2 from line 7. If zero or less, enter -0- . . 14 15 Income distribution deduction. Enter the smaller of line 13 or line 14 here and on page 1, line 18 15 Schedule G Tax Computation (see instructions) 1 Tax: a Tax on taxable income. See instructions . . . . . . . 1a

b Tax on lump-sum distributions. Attach Form 4972 . . . . 1b c Alternative minimum tax (from Schedule I (Form 1041), line 56) 1c d Total. Add lines 1a through 1c . . . . . . . . . . . . . . . . . . . 1d

2a Foreign tax credit. Attach Form 1116 . . . . . . . . . . . . 2a b General business credit. Attach Form 3800 . . . . . . . . . . 2b c Credit for prior year minimum tax. Attach Form 8801 . . . . . . 2c d Bond credits. Attach Form 8912 . . . . . . . . . . . . . 2d

3 Subtract line 2e from line 1d. If zero or less, enter -0- . . . . . . . . . . . . . . . 3e Total credits. Add lines 2a through 2d . . . . . . . . . . . . . . . . . . . 2e

4 4 Net investment income tax from Form 8960, line 21 . . . . . . . . . . . . . . . .5 Recapture taxes. Check if from: Form 4255 Form 8611 . . . . . . . . . . . 5 6 Household employment taxes. Attach Schedule H (Form 1040) . . . . . . . . . . . . 6 7 Total tax. Add lines 3 through 6. Enter here and on page 1, line 23 . . . . . . . . . . 7

Other Information Yes No 1 Did the estate or trust receive tax-exempt income? If “Yes,” attach a computation of the allocation of expenses.

Enter the amount of tax-exempt interest income and exempt-interest dividends $ 2 Did the estate or trust receive all or any part of the earnings (salary, wages, and other compensation) of any

individual by reason of a contract assignment or similar arrangement? . . . . . . . . . . . . . . .3 At any time during calendar year 2016, did the estate or trust have an interest in or a signature or other authority

over a bank, securities, or other financial account in a foreign country? . . . . . . . . . . . . . .See the instructions for exceptions and filing requirements for FinCEN Form 114. If “Yes,” enter the name of the foreign country

4 During the tax year, did the estate or trust receive a distribution from, or was it the grantor of, or transferor to, a foreign trust? If “Yes,” the estate or trust may have to file Form 3520. See instructions . . . . . . . . .

5 Did the estate or trust receive, or pay, any qualified residence interest on seller-provided financing? If “Yes,” see the instructions for required attachment . . . . . . . . . . . . . . . . . . . . . . . . .

6 If this is an estate or a complex trust making the section 663(b) election, check here. See instructions . .7 To make a section 643(e)(3) election, attach Schedule D (Form 1041), and check here. See instructions . .8 If the decedent’s estate has been open for more than 2 years, attach an explanation for the delay in closing the estate, and check here 9 Are any present or future trust beneficiaries skip persons? See instructions 10 Was the trust a specified domestic entity required to file Form 8938 for the tax year (see the Instructions for

Form 8938)?

. . . . . . . . . . . . .

Form 1041 (2016)



12,00015,000

12,000

3,000

Bob Adams Trust XX-XXXXXXX

SCHEDULE D (Form 1041)


Capital Gains and Losses Attach to Form 1041, Form 5227, or Form 990-T.

Use Form 8949 to list your transactions for lines 1b, 2, 3, 8b, 9 and 10.

Information about Schedule D and its separate instructions is at www.irs.gov/form1041.

OMB No. 1545-0092

16Name of estate or trust Employer identification number

Note: Form 5227 filers need to complete only Parts I and II.

See instructions for how to figure the amounts to enter on the lines below. This form may be easier to complete if you round o� cents to whole dollars.

Part I Short-Term Capital Gains and Losses—Assets Held One Year or Less

(d) Proceeds

(sales price)

(e)Cost

(or other basis)

(g)Adjustments

to gain or loss from Form(s) 8949, Part I,

line 2, column (g)

(h) Gain or (loss) Subtract column (e) from column (d) and

combine the result with column (g)

1a Totals for all short-term transactions reported on Form 1099-B for which basis was reported to the IRS and for which you have no adjustments (see instructions). However, if you choose to report all these transactions on Form 8949, leave this line blank and go to line 1b .

1b Totals for all transactions reported on Form(s) 8949 with Box A checked . . . . . . . . . . . . .

2 Totals for all transactions reported on Form(s) 8949 with Box B checked . . . . . . . . . . . . .

3 Totals for all transactions reported on Form(s) 8949 with Box C checked . . . . . . . . . . . . .

4 Short-term capital gain or (loss) from Forms 4684, 6252, 6781, and 8824 . . . . . . . . . 4

5 Net short-term gain or (loss) from partnerships, S corporations, and other estates or trusts . . . 56 Short-term capital loss carryover. Enter the amount, if any, from line 9 of the 2015 Capital Loss

Carryover Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ( )7 Net short-term capital gain or (loss). Combine lines 1a through 6 in column (h). Enter here and on

line 17, column (3) on the back . . . . . . . . . . . . . . . . . . . . . 7Part II Long-Term Capital Gains and Losses—Assets Held More Than One Year


(d) Proceeds

(sales price)

(e)Cost

(or other basis)

(g)Adjustments

to gain or loss from Form(s) 8949, Part II,

line 2, column (g)



8a Totals for all long-term transactions reported on Form 1099-B for which basis was reported to the IRS and for which you have no adjustments (see instructions). However, if you choose to report all these transactions on Form 8949, leave this line blank and go to line 8b .

8b Totals for all transactions reported on Form(s) 8949 with Box D checked . . . . . . . . . . . . .

9 Totals for all transactions reported on Form(s) 8949 with Box E checked . . . . . . . . . . . . .

10 Totals for all transactions reported on Form(s) 8949 with Box F checked. . . . . . . . . . . . . .

11 Long-term capital gain or (loss) from Forms 2439, 4684, 6252, 6781, and 8824 . . . . . . . 11

12 Net long-term gain or (loss) from partnerships, S corporations, and other estates or trusts . . . 12

13 Capital gain distributions . . . . . . . . . . . . . . . . . . . . . . . . . 13

14 Gain from Form 4797, Part I . . . . . . . . . . . . . . . . . . . . . . . . 14 15 Long-term capital loss carryover. Enter the amount, if any, from line 14 of the 2015 Capital Loss

Carryover Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . 15 ( )16 Net long-term capital gain or (loss). Combine lines 8a through 15 in column (h). Enter here and on

line 18a, column (3) on the back . . . . . . . . . . . . . . . . . . . . . 16For Paperwork Reduction Act Notice, see the Instructions for Form 1041. Cat. No. 11376V Schedule D (Form 1041) 2016



12,000

12,000

12,000

-0-

-0-12,000

-0-

-0-

12,000

12,000

11,700

12,000

2,550

2,5509,1509,150

11,700

11,700

11,70011,700

9,450

1,373

2,550

1,373

2,975

-0--0-

-0-

1,373

Schedule D (Form 1041) 2016 Page 2 Part III Summary of Parts I and II

Caution: Read the instructions before completing this part. (1) Beneficiaries’

(see instr.) (2) Estate’s or trust’s (3) Total

17 Net short-term gain or (loss) . . . . . . . . . . 17 18 Net long-term gain or (loss):

a Total for year . . . . . . . . . . . . . . . 18a b Unrecaptured section 1250 gain (see line 18 of the wrksht.) . 18b c 28% rate gain . . . . . . . . . . . . . . . 18c

19 Total net gain or (loss). Combine lines 17 and 18a . . 19

Note: If line 19, column (3), is a net gain, enter the gain on Form 1041, line 4 (or Form 990-T, Part I, line 4a). If lines 18a and 19, column (2), are net gains, go to Part V, and don't complete Part IV. If line 19, column (3), is a net loss, complete Part IV and the Capital Loss Carryover Worksheet, as necessary.

Part IV Capital Loss Limitation 20 Enter here and enter as a (loss) on Form 1041, line 4 (or Form 990-T, Part I, line 4c, if a trust), the smaller of:

a The loss on line 19, column (3) or b $3,000 . . . . . . . . . . . . . . . . . 20 ( )

Note: If the loss on line 19, column (3), is more than $3,000, or if Form 1041, page 1, line 22 (or Form 990-T, line 34), is a loss, complete the Capital Loss Carryover Worksheet in the instructions to figure your capital loss carryover.

Part V Tax Computation Using Maximum Capital Gains Rates Form 1041 filers. Complete this part only if both lines 18a and 19 in column (2) are gains, or an amount is entered in Part I or Part II and there is an entry on Form 1041, line 2b(2), and Form 1041, line 22, is more than zero.

Caution: Skip this part and complete the Schedule D Tax Worksheet in the instructions if:• Either line 18b, col. (2) or line 18c, col. (2) is more than zero, or • Both Form 1041, line 2b(1), and Form 4952, line 4g are more than zero. Form 990-T trusts. Complete this part only if both lines 18a and 19 are gains, or qualified dividends are included in income in Part I of Form 990-T, and Form 990-T, line 34, is more than zero. Skip this part and complete the Schedule D Tax Worksheet in the instructions if either line 18b, col. (2) or line 18c, col. (2) is more than zero.

21 Enter taxable income from Form 1041, line 22 (or Form 990-T, line 34) . . 21 22 Enter the smaller of line 18a or 19 in column (2)

but not less than zero . . . . . . . . . 2223 Enter the estate’s or trust’s qualified dividends from

Form 1041, line 2b(2) (or enter the qualified dividends included in income in Part I of Form 990-T) . . . . 23

24 Add lines 22 and 23 . . . . . . . . . . 24 25 If the estate or trust is filing Form 4952, enter the

amount from line 4g; otherwise, enter -0- . . 25 26 Subtract line 25 from line 24. If zero or less, enter -0- . . . . . . . 26 27 Subtract line 26 from line 21. If zero or less, enter -0- . . . . . . . 27 28 Enter the smaller of the amount on line 21 or $2,550 . . . . . . . 28 29 Enter the smaller of the amount on line 27 or line 28 . . . . . . . 29 30 Subtract line 29 from line 28. If zero or less, enter -0-. This amount is taxed at 0% . . . . . 3031 Enter the smaller of line 21 or line 26 . . . . . . . . . . . . . 3132 Subtract line 30 from line 26 . . . . . . . . . . . . . . . 3233 Enter the smaller of line 21 or $12,400 . . . . . . . . . . . . 3334 Add lines 27 and 30 . . . . . . . . . . . . . . . . . . 34 35 Subtract line 34 from line 33. If zero or less, enter -0- . . . . . . . 35 36 Enter the smaller of line 32 or line 35 . . . . . . . . . . . . 36 37 Multiply line 36 by 15% (0.15) . . . . . . . . . . . . . . . . . . . . . . 37 38 Enter the amount from line 31 . . . . . . . . . . . . . . . 38 39 Add lines 30 and 36 . . . . . . . . . . . . . . . . . . 39 40 Subtract line 39 from line 38. If zero or less, enter -0- . . . . . . . 4041 Multiply line 40 by 20% (0.20) . . . . . . . . . . . . . . . . . . . . . . 4142 Figure the tax on the amount on line 27. Use the 2016 Tax Rate Schedule for Estates

and Trusts (see the Schedule G instructions in the instructions for Form 1041) . . 4243 Add lines 37, 41, and 42 . . . . . . . . . . . . . . . . . 4344 Figure the tax on the amount on line 21. Use the 2016 Tax Rate Schedule for Estates

and Trusts (see the Schedule G instructions in the instructions for Form 1041) . . 4445 Tax on all taxable income. Enter the smaller of line 43 or line 44 here and on Form 1041, Schedule

G, line 1a (or Form 990-T, line 36) . . . . . . . . . . . . . . . . . . . . . 45Schedule D (Form 1041) 2016



XX-XXXXXXX

Bob Adams Trust

First BankPost OfficeBox 100City, ST 44444

XXX-XX-XXXX

Bob Adams3 Jackson HighwayCity, ST 44444

X

30,000

30,000

2,660*

A 14,640

*5,000 – ($1,000 + $840 + $500) = $2,660

Schedule K-1 (Form 1041) Department of the Treasury Internal Revenue Service

16For calendar year 2016,

or tax year beginning , 2016,

and ending , 20

Beneficiary’s Share of Income, Deductions, Credits, etc. See back of form and instructions.

Final K-1 Amended K-1 OMB No. 1545-0092

Information About the Estate or Trust Part I A Estate’s or trust’s employer identification number

B Estate’s or trust’s name

C Fiduciary's name, address, city, state, and ZIP code

D Check if Form 1041-T was filed and enter the date it was filed

E Check if this is the final Form 1041 for the estate or trust

Information About the BeneficiaryPart II F Beneficiary's identifying number

G Beneficiary's name, address, city, state, and ZIP code

H Domestic beneficiary Foreign beneficiary

Beneficiary’s Share of Current Year Income, Deductions, Credits, and Other Items

Part III

1 Interest income



3 Net short-term capital gain

4a Net long-term capital gain

4b 28% rate gain


5 Other portfolio and nonbusiness income

6 Ordinary business income

7 Net rental real estate income

8 Other rental income

9 Directly apportioned deductions

10 Estate tax deduction

11 Final year deductions

12 Alternative minimum tax adjustment

13 Credits and credit recapture


*See attached statement for additional information. Note. A statement must be attached showing thebeneficiary’s share of income and directly apportioned deductions from each business, rental real estate, andother rental activity.

For

IRS

Use

Onl

y

For Paperwork Reduction Act Notice, see the Instructions for Form 1041. IRS.gov/form1041 Cat. No. 11380D Schedule K-1 (Form 1041) 2016



Schedule K-1 (Form 1041) 2016 Page 2 This list identifies the codes used on Schedule K-1 for beneficiaries and provides summarized reporting information for beneficiaries who file Form 1040. For detailed reporting and filing information, see the Instructions for Schedule K-1 (Form 1041) for a Beneficiary Filing Form 1040 and the instructions for your income tax return.

Report on

1. Interest income Form 1040, line 8a

2a. Ordinary dividends Form 1040, line 9a

2b. Qualified dividends Form 1040, line 9b

3. Net short-term capital gain Schedule D, line 5

4a. Net long-term capital gain Schedule D, line 12

4b. 28% rate gain 28% Rate Gain Worksheet, line 4 (Schedule D Instructions)

4c. Unrecaptured section 1250 gain Unrecaptured Section 1250 Gain Worksheet, line 11 (Schedule D Instructions)

5. Other portfolio and nonbusiness income

Schedule E, line 33, column (f)

6. Ordinary business income Schedule E, line 33, column (d) or (f)

7. Net rental real estate income Schedule E, line 33, column (d) or (f)

8. Other rental income Schedule E, line 33, column (d) or (f)

9. Directly apportioned deductions

Code

A Depreciation Form 8582 or Schedule E, line 33, column (c) or (e)

B Depletion Form 8582 or Schedule E, line 33, column (c) or (e)

C Amortization Form 8582 or Schedule E, line 33, column (c) or (e)

10. Estate tax deduction Schedule A, line 28

11. Final year deductions

A Excess deductions Schedule A, line 23

B Short-term capital loss carryover Schedule D, line 5

C Long-term capital loss carryover Schedule D, line 12; line 5 of the wksht. for Sch. D, line 18; and line 16 of the wksht. for Sch. D, line 19

D Net operating loss carryover — regular tax

Form 1040, line 21

E Net operating loss carryover — minimum tax

Form 6251, line 11

12. Alternative minimum tax (AMT) items A Adjustment for minimum tax purposes Form 6251, line 15

B AMT adjustment attributable to qualified dividends

C AMT adjustment attributable to net short-term capital gain

D AMT adjustment attributable to net long-term capital gain

E AMT adjustment attributable to unrecaptured section 1250 gain

F AMT adjustment attributable to 28% rate gain

G Accelerated depreciation

H Depletion

I Amortization

J Exclusion items 2017 Form 8801

} See the beneficiary’s instructions and the Instructions for Form 6251

13. Credits and credit recapture

Code Report on

A Credit for estimated taxes Form 1040, line 65

B Credit for backup withholding Form 1040, line 64

C Low-income housing credit

D Rehabilitation credit and energy credit

E Other qualifying investment credit

F Work opportunity credit

G Credit for small employer health insurance premiums

H Biofuel producer credit

I Credit for increasing research activities

J Renewable electricity, refined coal, and Indian coal production credit

K Empowerment zone employment credit

L Indian employment credit

M Orphan drug credit

N Credit for employer-provided child care and facilities

O Biodiesel and renewable diesel fuels credit

P Credit to holders of tax credit bonds

Q Credit for employer di�erential wage payments

R Recapture of credits

See the beneficiary’s instructions

14. Other information

A Tax-exempt interest Form 1040, line 8b

B Foreign taxes Form 1040, line 48 or Sch. A, line 8

C Qualified production activities income Form 8903, line 7, col. (b) (also see the beneficiary's instructions)

D Form W-2 wages Form 8903, line 17

E Net investment income Form 4952, line 4a

F Gross farm and fishing income Schedule E, line 42

G Foreign trading gross receipts (IRC 942(a))

See the Instructions for Form 8873

H Adjustment for section 1411 net investment income or deductions

Form 8960, line 7 (also see the beneficiary's instructions)

I Other information See the beneficiary’s instructions

}Note. If you are a beneficiary who does not file a Form 1040, see instructions for the type of income tax return you are filing.



30,000

12,0004,000

46,000

840

500

1,340

14,500

10014,60030,060

5,8885,360

5,360

5,360

528

44,660

($1,200 – $360)

13,319 16,681

2

XCathy and Karen Stephens Trust (Complex Trust) XX-XXXXXXX

Merchants Bank 2003

3000 Sun Plaza

City, ST 88888

Fred Fidus 3-14-17 XX-XXXXXXX

Sarah PublicSarah Public 3-13-17 X Sarah Public 200 Sun Plaza City, ST 88888

x

*Line 5: Net Rental income = Rental income $5,000 – Rental expenses $1,000 = $4,000Note: Pages concerning the AMT are omitted because the trust does not owe the AMT.See the Comprehensive Illustration on text page C:14-24 for tax form facts.

Form 1041 Department of the Treasury—Internal Revenue Service

U.S. Income Tax Return for Estates and Trusts 16 OMB No. 1545-0092

For calendar year 2016 or fiscal year beginning , 2016, and ending , 20 Name of estate or trust (If a grantor type trust, see the instructions.)

Name and title of fiduciary

Number, street, and room or suite no. (If a P.O. box, see the instructions.)


Information about Form 1041 and its separate instructions is at www.irs.gov/form1041.A Check all that apply:

Decedent’s estate

Simple trust

Complex trust

Qualified disability trust

ESBT (S portion only)

Grantor type trust



Pooled income fundB Number of Schedules K-1

attached (see instructions)

C Employer identification number

D Date entity created

E Nonexempt charitable and split- interest trusts, check applicable box(es), see instructions.

Described in sec. 4947(a)(1). Check here

if not a private foundation . . .

Described in sec. 4947(a)(2)F Check

applicable boxes:

Initial return Final return Amended return Net operating loss carryback

Change in trust's name Change in fiduciary Change in fiduciary's name Change in fiduciary's address

G Check here if the estate or filing trust made a section 645 election . . . . . .

Inco

me

1 Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2a Total ordinary dividends . . . . . . . . . . . . . . . . . . . . . . . . 2a

b Qualified dividends allocable to: (1) Beneficiaries (2) Estate or trust 3 Business income or (loss). Attach Schedule C or C-EZ (Form 1040) . . . . . . . . . 3 4 Capital gain or (loss). Attach Schedule D (Form 1041) . . . . . . . . . . . . . . 4 5 Rents, royalties, partnerships, other estates and trusts, etc. Attach Schedule E (Form 1040) . 5 6 Farm income or (loss). Attach Schedule F (Form 1040) . . . . . . . . . . . . . . 6 7 Ordinary gain or (loss). Attach Form 4797 . . . . . . . . . . . . . . . . . . 7 8 Other income. List type and amount 8 9 Total income. Combine lines 1, 2a, and 3 through 8 . . . . . . . . . . . . . 9

Ded

uctio

ns

10 Interest. Check if Form 4952 is attached . . . . . . . . . . . . . . . 10 11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 12 Fiduciary fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 13 Charitable deduction (from Schedule A, line 7) . . . . . . . . . . . . . . . . 13 14 Attorney, accountant, and return preparer fees . . . . . . . . . . . . . . . . 14 15 a Other deductions not subject to the 2% floor (attach schedule) . . . . . . . . . . . 15a

b Net operating loss deduction. See instructions . . . . . . . . . . . . . . . . 15b c Allowable miscellaneous itemized deductions subject to the 2% floor . . . . . . . . . 15c

16 Add lines 10 through 15c . . . . . . . . . . . . . . . . . . . . . . 16 17 Adjusted total income or (loss). Subtract line 16 from line 9 . . . 17 18 Income distribution deduction (from Schedule B, line 15). Attach Schedules K-1 (Form 1041) 18 19 Estate tax deduction including certain generation-skipping taxes (attach computation) . . . 19 20 Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 21 Add lines 18 through 20 . . . . . . . . . . . . . . . . . . . . . . . 21

Tax

and

Pay

men

ts

22 Taxable income. Subtract line 21 from line 17. If a loss, see instructions . . . . . . . . 22 23 Total tax (from Schedule G, line 7) . . . . . . . . . . . . . . . . . . . . 23 24 Payments: a 2016 estimated tax payments and amount applied from 2015 return . . . . 24a

b Estimated tax payments allocated to beneficiaries (from Form 1041-T) . . . . . . . . 24b c Subtract line 24b from line 24a . . . . . . . . . . . . . . . . . . . . . 24c d Tax paid with Form 7004. See instructions . . . . . . . . . . . . . . . . . 24d e Federal income tax withheld. If any is from Form(s) 1099, check . . . . . . . . 24e

Other payments: f Form 2439 ; g Form 4136 ; Total 24h 25 Total payments. Add lines 24c through 24e, and 24h . . . . . . . . . . . . . 25 26 Estimated tax penalty. See instructions . . . . . . . . . . . . . . . . . . . 26 27 Tax due. If line 25 is smaller than the total of lines 23 and 26, enter amount owed . . . . . 27 28 Overpayment. If line 25 is larger than the total of lines 23 and 26, enter amount overpaid . . 28 29 Amount of line 28 to be: a Credited to 2017 estimated tax ; b Refunded 29

Sign Here


Signature of fiduciary or o�cer representing fiduciary Date EIN of fiduciary if a financial institution

May the IRS discuss this return with the preparer shown below (see instr.)? Yes No



PTIN

Firm’s name

Firm's address

Firm's EIN

Phone no.

For Paperwork Reduction Act Notice, see the separate instructions. Cat. No. 11370H Form 1041 (2016)

Trust TIN



44,660 14,640

(12,000)47,300

-0- 21,00021,0006,500

14,50032,66014,500

5,217

5,217671

5,888

5,217

15,000; (see below)

X

X

X

X

X

($15,000 – $360)

Line 2: Allocation of expenses: x $1,200 = $360 of trustee’s fee$15,000————$50,000 allocated to tax-exempt income

48,500

Form 1041 (2016) Page 2 Schedule A Charitable Deduction. Don't complete for a simple trust or a pooled income fund. 1 Amounts paid or permanently set aside for charitable purposes from gross income. See instructions . 1 2 Tax-exempt income allocable to charitable contributions. See instructions . . . . . . . . 2 3 Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . 3 4 Capital gains for the tax year allocated to corpus and paid or permanently set aside for charitable purposes 4 5 Add lines 3 and 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 6 Section 1202 exclusion allocable to capital gains paid or permanently set aside for charitable purposes. See instructions . 6 7 Charitable deduction. Subtract line 6 from line 5. Enter here and on page 1, line 13 . . . . . 7

Schedule B Income Distribution Deduction 1 Adjusted total income. See instructions . . . . . . . . . . . . . . . . . . . . 1 2 Adjusted tax-exempt interest . . . . . . . . . . . . . . . . . . . . . . . 2 3 Total net gain from Schedule D (Form 1041), line 19, column (1). See instructions . . . . . . 3 4 Enter amount from Schedule A, line 4 (minus any allocable section 1202 exclusion) . . . . . 4 5 Capital gains for the tax year included on Schedule A, line 1. See instructions . . . . . . . 5 6 Enter any gain from page 1, line 4, as a negative number. If page 1, line 4, is a loss, enter the loss as a positive number . 6 7 Distributable net income. Combine lines 1 through 6. If zero or less, enter -0- . . . . . . . 7 8 If a complex trust, enter accounting income for the tax year as

determined under the governing instrument and applicable local law . 8 9 Income required to be distributed currently . . . . . . . . . . . . . . . . . . . 9

10 Other amounts paid, credited, or otherwise required to be distributed . . . . . . . . . . 10 11 Total distributions. Add lines 9 and 10. If greater than line 8, see instructions . . . . . . . 11 12 Enter the amount of tax-exempt income included on line 11 . . . . . . . . . . . . . 12 13 Tentative income distribution deduction. Subtract line 12 from line 11 . . . . . . . . . . 13 14 Tentative income distribution deduction. Subtract line 2 from line 7. If zero or less, enter -0- . . 14 15 Income distribution deduction. Enter the smaller of line 13 or line 14 here and on page 1, line 18 15 Schedule G Tax Computation (see instructions) 1 Tax: a Tax on taxable income. See instructions . . . . . . . 1a

b Tax on lump-sum distributions. Attach Form 4972 . . . . 1b c Alternative minimum tax (from Schedule I (Form 1041), line 56) 1c d Total. Add lines 1a through 1c . . . . . . . . . . . . . . . . . . . 1d

2a Foreign tax credit. Attach Form 1116 . . . . . . . . . . . . 2a b General business credit. Attach Form 3800 . . . . . . . . . . 2b c Credit for prior year minimum tax. Attach Form 8801 . . . . . . 2c d Bond credits. Attach Form 8912 . . . . . . . . . . . . . 2d

3 Subtract line 2e from line 1d. If zero or less, enter -0- . . . . . . . . . . . . . . . 3e Total credits. Add lines 2a through 2d . . . . . . . . . . . . . . . . . . . 2e

4 4 Net investment income tax from Form 8960, line 21 . . . . . . . . . . . . . . . .5 Recapture taxes. Check if from: Form 4255 Form 8611 . . . . . . . . . . . 5 6 Household employment taxes. Attach Schedule H (Form 1040) . . . . . . . . . . . . 6 7 Total tax. Add lines 3 through 6. Enter here and on page 1, line 23 . . . . . . . . . . 7

Other Information Yes No 1 Did the estate or trust receive tax-exempt income? If “Yes,” attach a computation of the allocation of expenses.

Enter the amount of tax-exempt interest income and exempt-interest dividends $ 2 Did the estate or trust receive all or any part of the earnings (salary, wages, and other compensation) of any

individual by reason of a contract assignment or similar arrangement? . . . . . . . . . . . . . . .3 At any time during calendar year 2016, did the estate or trust have an interest in or a signature or other authority

over a bank, securities, or other financial account in a foreign country? . . . . . . . . . . . . . .See the instructions for exceptions and filing requirements for FinCEN Form 114. If “Yes,” enter the name of the foreign country

4 During the tax year, did the estate or trust receive a distribution from, or was it the grantor of, or transferor to, a foreign trust? If “Yes,” the estate or trust may have to file Form 3520. See instructions . . . . . . . . .

5 Did the estate or trust receive, or pay, any qualified residence interest on seller-provided financing? If “Yes,” see the instructions for required attachment . . . . . . . . . . . . . . . . . . . . . . . . .

6 If this is an estate or a complex trust making the section 663(b) election, check here. See instructions . .7 To make a section 643(e)(3) election, attach Schedule D (Form 1041), and check here. See instructions . .8 If the decedent’s estate has been open for more than 2 years, attach an explanation for the delay in closing the estate, and check here 9 Are any present or future trust beneficiaries skip persons? See instructions 10 Was the trust a specified domestic entity required to file Form 8938 for the tax year (see the Instructions for

Form 8938)?

. . . . . . . . . . . . .

Form 1041 (2016)

XX



12,000

12,000

3,00015,000

Cathy and Karen Stephens Trust XX-XXXXXXX

SCHEDULE D (Form 1041)


Capital Gains and Losses Attach to Form 1041, Form 5227, or Form 990-T.

Use Form 8949 to list your transactions for lines 1b, 2, 3, 8b, 9 and 10.

Information about Schedule D and its separate instructions is at www.irs.gov/form1041.

OMB No. 1545-0092

16Name of estate or trust Employer identification number

Note: Form 5227 filers need to complete only Parts I and II.


Part I Short-Term Capital Gains and Losses—Assets Held One Year or Less

(d) Proceeds

(sales price)

(e)Cost

(or other basis)

(g)Adjustments

to gain or loss from Form(s) 8949, Part I,

line 2, column (g)



1a Totals for all short-term transactions reported on Form 1099-B for which basis was reported to the IRS and for which you have no adjustments (see instructions). However, if you choose to report all these transactions on Form 8949, leave this line blank and go to line 1b .

1b Totals for all transactions reported on Form(s) 8949 with Box A checked . . . . . . . . . . . . .

2 Totals for all transactions reported on Form(s) 8949 with Box B checked . . . . . . . . . . . . .

3 Totals for all transactions reported on Form(s) 8949 with Box C checked . . . . . . . . . . . . .

4 Short-term capital gain or (loss) from Forms 4684, 6252, 6781, and 8824 . . . . . . . . . 4

5 Net short-term gain or (loss) from partnerships, S corporations, and other estates or trusts . . . 56 Short-term capital loss carryover. Enter the amount, if any, from line 9 of the 2015 Capital Loss

Carryover Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ( )7 Net short-term capital gain or (loss). Combine lines 1a through 6 in column (h). Enter here and on

line 17, column (3) on the back . . . . . . . . . . . . . . . . . . . . . 7Part II Long-Term Capital Gains and Losses—Assets Held More Than One Year


(d) Proceeds

(sales price)

(e)Cost

(or other basis)

(g)Adjustments

to gain or loss from Form(s) 8949, Part II,

line 2, column (g)



8a Totals for all long-term transactions reported on Form 1099-B for which basis was reported to the IRS and for which you have no adjustments (see instructions). However, if you choose to report all these transactions on Form 8949, leave this line blank and go to line 8b .

8b Totals for all transactions reported on Form(s) 8949 with Box D checked . . . . . . . . . . . . .

9 Totals for all transactions reported on Form(s) 8949 with Box E checked . . . . . . . . . . . . .

10 Totals for all transactions reported on Form(s) 8949 with Box F checked. . . . . . . . . . . . . .

11 Long-term capital gain or (loss) from Forms 2439, 4684, 6252, 6781, and 8824 . . . . . . . 11

12 Net long-term gain or (loss) from partnerships, S corporations, and other estates or trusts . . . 12

13 Capital gain distributions . . . . . . . . . . . . . . . . . . . . . . . . . 13

14 Gain from Form 4797, Part I . . . . . . . . . . . . . . . . . . . . . . . . 14 15 Long-term capital loss carryover. Enter the amount, if any, from line 14 of the 2015 Capital Loss

Carryover Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . 15 ( )16 Net long-term capital gain or (loss). Combine lines 8a through 15 in column (h). Enter here and on

line 18a, column (3) on the back . . . . . . . . . . . . . . . . . . . . . 16For Paperwork Reduction Act Notice, see the Instructions for Form 1041. Cat. No. 11376V Schedule D (Form 1041) 2016



12,000

12,000

12,000

16,68128,681

-0-

12,000

12,000

30,060

28,6811,3792,5501,379

28,68127,51012,4002,5509,8509,850

28,68111,02117,660

2075,217

10,199

1,171

1,478

3,532

5,217

Schedule D (Form 1041) 2016 Page 2 Part III Summary of Parts I and II

Caution: Read the instructions before completing this part. (1)

(see instr.) (2) Estate’s or trust’s (3) Total

17 Net short-term gain or (loss) . . . . . . . . . . 17 18 Net long-term gain or (loss):

a Total for year . . . . . . . . . . . . . . . 18a b Unrecaptured section 1250 gain (see line 18 of the wrksht.) . 18b c 28% rate gain . . . . . . . . . . . . . . . 18c

19 Total net gain or (loss). Combine lines 17 and 18a . . 19

Note: If line 19, column (3), is a net gain, enter the gain on Form 1041, line 4 (or Form 990-T, Part I, line 4a). If lines 18a and 19, column (2), are net gains, go to Part V, and don't complete Part IV. If line 19, column (3), is a net loss, complete Part IV and the Capital Loss Carryover Worksheet, as necessary.

Part IV Capital Loss Limitation 20 Enter here and enter as a (loss) on Form 1041, line 4 (or Form 990-T, Part I, line 4c, if a trust), the smaller of:

a The loss on line 19, column (3) or b $3,000 . . . . . . . . . . . . . . . . . 20 ( )

Note: If the loss on line 19, column (3), is more than $3,000, or if Form 1041, page 1, line 22 (or Form 990-T, line 34), is a loss, complete the Capital Loss Carryover Worksheet in the instructions to figure your capital loss carryover.

Part V Tax Computation Using Maximum Capital Gains Rates Form 1041 filers. Complete this part only if both lines 18a and 19 in column (2) are gains, or an amount is entered in Part I or Part II and there is an entry on Form 1041, line 2b(2), and Form 1041, line 22, is more than zero.

Caution: Skip this part and complete the Schedule D Tax Worksheet in the instructions if:• Either line 18b, col. (2) or line 18c, col. (2) is more than zero, or • Both Form 1041, line 2b(1), and Form 4952, line 4g are more than zero. Form 990-T trusts. Complete this part only if both lines 18a and 19 are gains, or dividends are included in income in Part I of Form 990-T, and Form 990-T, line 34, is more than zero. Skip this part and complete the Schedule D Tax Worksheet in the instructions if either line 18b, col. (2) or line 18c, col. (2) is more than zero.

21 Enter taxable income from Form 1041, line 22 (or Form 990-T, line 34) . . 21 22 Enter the smaller of line 18a or 19 in column (2)

but not less than zero . . . . . . . . . 2223 Enter the estate’s or trust’s dividends from

Form 1041, line 2b(2) (or enter the dividends included in income in Part I of Form 990-T) . . . . 23

24 Add lines 22 and 23 . . . . . . . . . . 24 25 If the estate or trust is Form 4952, enter the

amount from line 4g; otherwise, enter -0- . . 25 26 Subtract line 25 from line 24. If zero or less, enter -0- . . . . . . . 26 27 Subtract line 26 from line 21. If zero or less, enter -0- . . . . . . . 27 28 Enter the smaller of the amount on line 21 or $2,550 . . . . . . . 28 29 Enter the smaller of the amount on line 27 or line 28 . . . . . . . 29 30 Subtract line 29 from line 28. If zero or less, enter -0-. This amount is taxed at 0% . . . . . 3031 Enter the smaller of line 21 or line 26 . . . . . . . . . . . . . 3132 Subtract line 30 from line 26 . . . . . . . . . . . . . . . 3233 Enter the smaller of line 21 or $12,400 . . . . . . . . . . . . 3334 Add lines 27 and 30 . . . . . . . . . . . . . . . . . . 34 35 Subtract line 34 from line 33. If zero or less, enter -0- . . . . . . . 35 36 Enter the smaller of line 32 or line 35 . . . . . . . . . . . . 36 37 Multiply line 36 by 15% (0.15) . . . . . . . . . . . . . . . . . . . . . . 37 38 Enter the amount from line 31 . . . . . . . . . . . . . . . 38 39 Add lines 30 and 36 . . . . . . . . . . . . . . . . . . 39 40 Subtract line 39 from line 38. If zero or less, enter -0- . . . . . . . 4041 Multiply line 40 by 20% (0.20) . . . . . . . . . . . . . . . . . . . . . . 4142 Figure the tax on the amount on line 27. Use the 2016 Tax Rate Schedule for Estates

and Trusts (see the Schedule G instructions in the instructions for Form 1041) . . 4243 Add lines 37, 41, and 42 . . . . . . . . . . . . . . . . . 4344 Figure the tax on the amount on line 21. Use the 2016 Tax Rate Schedule for Estates

and Trusts (see the Schedule G instructions in the instructions for Form 1041) . . 4445 Tax on all taxable income. Enter the smaller of line 43 or line 44 here and on Form 1041, Schedule

G, line 1a (or Form 990-T, line 36) . . . . . . . . . . . . . . . . . . . . . 45Schedule D (Form 1041) 2016



Form 8960Department of the Treasury Internal Revenue Service (99)

Net Investment Income Tax— Individuals, Estates, and Trusts

Attach to your tax returnInformation about Form 8960 and its separate instructions is at www.irs.gov/form8960.

OMB No. 1545-2227


Name(s) shown on your tax return Your social security number or EIN

Part I Investment Income Section 6013(g) election (see instructions)

Regulations section 1.1411-10(g) election (see instructions)Section 6013(h) election (see instructions)

1 Taxable interest (see instructions) . . . . . .. . .. . . . . . . . . . . . 1 2 Ordinary dividends (see instructions) . . . . . . . ... . . . . . . . . . . 2 3 Annuities (see instructions) . . . . .. . .. . . . . . . . .

. . . . .. . .. . . . . . . . . . . . . . .

. . . . . . 34a Rental real estate, royalties, partnerships, S corporations, trusts,

etc. (see instructions) . . . . . . ... . . . . . . 4ab Adjustment for net income or loss derived in the ordinary course of

a non-section 1411 trade or business (see instructions) . . . . 4bc Combine lines 4a and 4b . . . . . . . . . . . . . . . . . . . . . . . . 4c

5a Net gain or loss from disposition of property (see instructions) 5a

b Net gain or loss from disposition of property that is not subject to net investment income tax (see instructions) . . . . . . . 5b

c Adjustment from disposition of partnership interest or S corporationstock (see instructions) . . . . . . . . . . . . . . 5c

d Combine lines 5a through 5c . . . . . . . . . . . . . . . . . . . . . . 5d6 Adjustments to investment income for certain CFCs and PFICs (see instructions) . . . . . 67 Other modifications to investment income (see instructions) . . . . . . . . . . . 78 Total investment income. Combine lines 1, 2, 3, 4c, 5d, 6, and 7 . . . . . . . . . . . 8

Part II Investment Expenses Allocable to Investment Income and Modifications9a Investment interest expenses (see instructions) . . . . . . 9ab State, local, and foreign income tax (see instructions) . . . . 9bc Miscellaneous investment expenses (see instructions) . . . . 9cd Add lines 9a, 9b, and 9c . . . . . . . . . . . . . . . . . . . . . . . . 9d

10 Additional modifications (see instructions) . . . . . . . . . . . . . . . . . . 1011 Total deductions and modifications. Add lines 9d and 10 . . . . . . . . . . . . . 11Part III Tax Computation12 Net investment income. Subtract Part II, line 11 from Part I, line 8. Individuals complete lines 13–

17. Estates and trusts complete lines 18a–21. If zero or less, enter -0- . . . . . . . . . 12Individuals:

13 Modified adjusted gross income (see instructions) . . . . . 1314 Threshold based on filing status (see instructions) . . . . . 1415 Subtract line 14 from line 13. If zero or less, enter -0- . . . . 1516 Enter the smaller of line 12 or line 15 . . . . . . . . . . . . . . . . . . . . 1617 Net investment income tax for individuals. Multiply line 16 by 3.8% (.038). Enter here and

include on your tax return (see instructions) . . . . . . . . . . . . . . . . . 17Estates and Trusts:

18a Net investment income (line 12 above) . . . . . . . . . 18ab Deductions for distributions of net investment income and

deductions under section 642(c) (see instructions) . . . . . 18bc Undistributed net investment income. Subtract line 18b from 18a (see

instructions). If zero or less, enter -0- . . . . . . . . . . 18c19a Adjusted gross income (see instructions) . . . . . . . .* 19a

b Highest tax bracket for estates and trusts for the year (see instructions) . . . . . . . . . . . . . . . . . . 19b

c Subtract line 19b from line 19a. If zero or less, enter -0- . . . 19c20 Enter the smaller of line 18c or line 19c . . . . . . . . . . . . . . . . . . . 2021 Net investment income tax for estates and trusts. Multiply line 20 by 3.8% (.038). Enter here and

include on your tax return (see instructions) . . . . . . . . . . . . . . . . . 21For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 59474M Form (2016)8960

Cathy and Karen Stephens Trust XX-XXXXXXX

30,000

12,000

46,000

44,660

17,660

*$44,660 – $14,500 – $100 = $30,060

671

44,660

14,500

30,16030,060*

12,40017,660

12,000

1,340

1,340

1,340

4,000

4,000



XX-XXXXXXX

Cathy and Karen Stephens Trust

Merchants Bank3000 Sun PlazaCity, ST 88888

XXX-XX-XXXX

Cathy Stephens13 Sunny ShoresCity, ST 77777

X

8,879

8,879

788

A 4,333




and ending , 20












Part III

1 Interest income





4b 28% rate gain













For

IRS

Use

Onl

y




XX-XXXXXXX

Cathy and Karen Stephens Trust

Merchants Bank3000 Sun PlazaCity, ST 88888

XXX-XX-XXXX

Karen Stephens1472 Ski RunCity, ST 11111

X

4,440

4,440

393

A 2,167




and ending , 20












Part III

1 Interest income





4b 28% rate gain













For

IRS

Use

Onl

y




15,517

-0- 15,517

2,328

2,328

-0-

Andrew Roberts XXX-XX-XXXX

X

United States

Dividends

X

12-31-16 2,700* 2,328

*Denominated in Country X currency.See text Example C:16-35 for tax form facts.

Form 1116 Department of the Treasury Internal Revenue Service (99)

Foreign Tax Credit (Individual, Estate, or Trust)

Attach to Form 1040, 1040NR, 1041, or 990-T. Information about Form 1116 and its separate instructions is at www.irs.gov/form1116.

OMB No. 1545-0121


Name Identifying number as shown on page 1 of your tax return

Use a separate Form 1116 for each category of income listed below. See Categories of Income in the instructions. Check only one box on each Form1116. Report all amounts in U.S. dollars except where specified in Part II below.

a Passive category income b General category income

c Section 901(j) income d Certain income re-sourced by treaty

e Lump-sum distributions

f Resident of (name of country) Note: If you paid taxes to only one foreign country or U.S. possession, use column A in Part I and line A in Part II. If you paid taxes tomore than one foreign country or U.S. possession, use a separate column and line for each country or possession.

Part I Taxable Income or Loss From Sources Outside the United States (for Category Checked Above) Foreign Country or U.S. Possession

A B C Total

(Add cols. A, B, and C.) g Enter the name of the foreign country or U.S. possession . . . . . . . . . . .

1a Gross income from sources within country shownabove and of the type checked above (see instructions):

1ab Check if line 1a is compensation for personal

services as an employee, your total compensation from all sources is $250,000 or more, and you used an alternative basis to determine its source (see instructions) . .

Deductions and losses (Caution: See instructions.):

2 Expenses definitely related to the income on line1a (attach statement) . . . . . . . . .

3 Pro rata share of other deductions not definitely related:

a Certain itemized deductions or standard deduction(see instructions) . . . . . . . . . . .

b Other deductions (attach statement) . . . . .c Add lines 3a and 3b . . . . . . . . . .d Gross foreign source income (see instructions) .e Gross income from all sources (see instructions) .f Divide line 3d by line 3e (see instructions) . . .g Multiply line 3c by line 3f . . . . . . . .

4 Pro rata share of interest expense (see instructions): a Home mortgage interest (use the Worksheet for

Home Mortgage Interest in the instructions) . .b Other interest expense . . . . . . . . .

5 Losses from foreign sources . . . . . . .6 Add lines 2, 3g, 4a, 4b, and 5 . . . . . . . 67 Subtract line 6 from line 1a. Enter the result here and on line 15, page 2 . . . . . . . . . . 7

Part II Foreign Taxes Paid or Accrued (see instructions)

Co

untr

y

Credit is claimed for taxes

(you must check one) (h) Paid

(i) Accrued

(j) Date paid or accrued

Foreign taxes paid or accrued

In foreign currency

Taxes withheld at source on:

(k) Dividends (l) Rents

and royalties (m) Interest

(n) Other foreign taxes

paid or accrued

In U.S. dollars

Taxes withheld at source on:

(o) Dividends (p) Rentsand royalties (q) Interest

(r) Other foreign taxes

paid or accrued

(s) Total foreigntaxes paid or

accrued (add cols. (o) through (r))

A B C

8 Add lines A through C, column (s). Enter the total here and on line 9, page 2 . . . . . . . . 8 For Paperwork Reduction Act Notice, see instructions. Cat. No. 11440U Form 1116 (2016)

Country X



2,328

2,328

15,517

15,517

86,000

2,328

0.180430

11,017

1,988

1,988

1,9881,988

1,988

*

*Tax on $86,000 – (2 x $4,050) = $77,900 of taxable income based on the 2016 tax rate schedule.The figure reported on Line 41 is net of the standard deduction or itemized deductions.

1,988

Form 1116 (2016) Page 2 Part III Figuring the Credit

9 Enter the amount from line 8. These are your total foreign taxes paid or accrued for the category of income checked above Part I . . 9

10 Carryback or carryover (attach detailed computation) . . . . 10

11 Add lines 9 and 10 . . . . . . . . . . . . . . . 11

12 Reduction in foreign taxes (see instructions) . . . . . . . 12 ( )

13 Taxes reclassified under high tax kickout (see instructions) . . 13

14 Combine lines 11, 12, and 13. This is the total amount of foreign taxes available for credit . . . 14

15 Enter the amount from line 7. This is your taxable income or (loss) from sources outside the United States (before adjustments) for the category of income checked above Part I (see instructions) . . . . . . 15

16 Adjustments to line 15 (see instructions) . . . . . . . . 16

17 Combine the amounts on lines 15 and 16. This is your net foreign source taxable income. (If the result is zero or less, you have no foreign tax credit for the category of income you checked above Part I. Skip lines 18 through 22. However, if you are filing more than one Form 1116, you must complete line 20.) . . . . . . . 17

18 Individuals: Enter the amount from Form 1040, line 41; or Form 1040NR, line 39. Estates and trusts: Enter your taxable income without the deduction for your exemption . . . . . . . . 18

Caution: If you figured your tax using the lower rates on qualified dividends or capital gains, see instructions.

19 Divide line 17 by line 18. If line 17 is more than line 18, enter “1” . . . . . . . . . . . 19 20 Individuals: Enter the amount from Form 1040, lines 44 and 46. If you are a nonresident alien,

enter the amounts from Form 1040NR, lines 42 and 44. Estates and trusts: Enter the amount from Form 1041, Schedule G, line 1a; or the total of Form 990-T, lines 36, 37, and 39 . . . . . . . 20

Caution: If you are completing line 20 for separate category e (lump-sum distributions), see instructions.

21 Multiply line 20 by line 19 (maximum amount of credit) . . . . . . . . . . . . . . . 21

22 Enter the smaller of line 14 or line 21. If this is the only Form 1116 you are filing, skip lines 23 through 27 and enter this amount on line 28. Otherwise, complete the appropriate line in Part IV (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Part IV Summary of Credits From Separate Parts III (see instructions) 23 Credit for taxes on passive category income . . . . . . . 23 24 Credit for taxes on general category income . . . . . . . 24 25 Credit for taxes on certain income re-sourced by treaty . . . . 25 26 Credit for taxes on lump-sum distributions . . . . . . . . 26 27 Add lines 23 through 26 . . . . . . . . . . . . . . . . . . . . . . . 27 28 Enter the smaller of line 20 or line 27 . . . . . . . . . . . . . . . . . . . 28 29 Reduction of credit for international boycott operations. See instructions for line 12 . . . . . 29 30 Subtract line 29 from line 28. This is your foreign tax credit. Enter here and on Form 1040, line

Form 1040NR, line 46; Form 1041, Schedule G, line 2a; or Form 990-T, line 41a 48;

. . . . . . 30Form 1116 (2016)



Lawrence E. Smith

123 Rue de Harve 75000 Paris France Financial Vice-President Very Public Corporation 90 Fifty Avenue, U.S. City, ST 10000 11 Rue de Nanettes/5 e’Etage, 75011 Paris France

X 2015

X United States

X N/A

123 Rue de Harve, 75000 Paris FranceJuly 10, 2014

July 10, 2014 Still a residentX

X Wife and two children for entire year

X X

xxx-xx-xxxx

2-19-16 2-23-16 5 1,200

Indefinite

ResidentX

X

4710 68th Terrace, City, ST 54321 (rented to unrelated party)

See text Example C:16-36 for tax form facts.

Form 2555 Department of the Treasury Internal Revenue Service

Foreign Earned Income Attach to Form 1040. Complete the Foreign Earned Income Tax Worksheet in the

instructions for Form 1040 if you enter an amount on lines 45 or 50.Information about Form 2555 and its separate instructions is at www.irs.gov/form2555.

OMB No. 1545-0074


For Use by U.S. Citizens and Resident Aliens Only Name shown on Form 1040 Your social security number

Part I General Information

1 Your foreign address (including country) 2 Your occupation

3 Employer’s name 4 a Employer’s U.S. address b Employer’s foreign address

5 Employer is (check any that apply):

a A foreign entity b A U.S. company c Self d A foreign a�liate of a U.S. company e Other (specify)

6 a If you previously filed Form 2555 or Form 2555-EZ, enter the last year you filed the form. b If you didn't previously file Form 2555 or 2555-EZ to claim either of the exclusions, check here and go to line 7. c Have you ever revoked either of the exclusions? . . . . . . . . . . . . . . . . . . . . Yes Nod If you answered “Yes,” enter the type of exclusion and the tax year for which the revocation was e�ective.

7 Of what country are you a citizen/national?

8 a Did you maintain a separate foreign residence for your family because of adverse living conditions at your tax home? See Second foreign household in the instructions . . . . . . . . . . . . . . . Yes No

b If “Yes,” enter city and country of the separate foreign residence. Also, enter the number of days during your tax year that you maintained a second household at that address.

9 List your tax home(s) during your tax year and date(s) established.

Next, complete either Part II or Part III. If an item doesn't apply, enter “NA.” If you don't give the information asked for, any exclusion or deduction you claim may be disallowed.

Part II Taxpayers Qualifying Under Bona Fide Residence Test (see instructions)

10 Date bona fide residence began , and ended 11 Kind of living quarters in foreign country a Purchased house b Rented house or apartment c Rented room

d Quarters furnished by employer 12a Did any of your family live with you abroad during any part of the tax year? . . . . . . . . . . . Yes No

b If “Yes,” who and for what period?

13 a Have you submitted a statement to the authorities of the foreign country where you claim bona fide residence that you aren't a resident of that country? See instructions . . . . . . . . . . . . Yes No

b Are you required to pay income tax to the country where you claim bona fide residence? See instructions . Yes NoIf you answered “Yes” to 13a and “No” to 13b, you don’t qualify as a bona fide resident. Don’t complete the rest of this part.

14 If you were present in the United States or its possessions during the tax year, complete columns (a)–(d) below. Don'tinclude the income from column (d) in Part IV, but report it on Form 1040.

(a) Datearrived in U.S.

(b) Date left U.S.

(c) Number of days in U.S.on business

(d) Income earned inU.S. on business

(attach computation)

(a) Datearrived in U.S.

(b) Date leftU.S.

(c) Number of days in U.S. on

business

(d) Income earned in U.S. on business

(attach computation)

15a List any contractual terms or other conditions relating to the length of your employment abroad.

b Enter the type of visa under which you entered the foreign country. c Did your visa limit the length of your stay or employment in a foreign country? If “Yes,” attach explanation . Yes Nod Did you maintain a home in the United States while living abroad? . . . . . . . . . . . . . . Yes Noe If “Yes,” enter address of your home, whether it was rented, the names of the occupants, and their relationship

to you.

For Paperwork Reduction Act Notice, see the Form 1040 instructions. Cat. No. 11900P Form 2555 (2016)



58,800*

*$60,000 salary – $1,200 U.S. source income from Part II, Line 14(d).

62,700

121,500

121,500

27,000

8,0006,40021,300

N/A

Form 2555 (2016) Page 2

Part III Taxpayers Qualifying Under Physical Presence Test (see instructions)

16 The physical presence test is based on the 12-month period from through 17 Enter your principal country of employment during your tax year.

18 If you traveled abroad during the 12-month period entered on line 16, complete columns (a)–(f) below. Exclude travel between foreign countries that didn't involve travel on or over international waters, or in or over the United States, for 24 hours or more. If you have no travel to report during the period, enter “Physically present in a foreign country or countries for the entire 12-month period.” Don't include the income from column (f) below in Part IV, but report it on Form 1040.

(a) Name of country(including U.S.) (b) Date arrived (c) Date left

(d) Full days present in country

(e) Number of days in U.S.on business

(f) Income earned in U.S. on business (attach

computation)

Part IV All Taxpayers

Note: Enter on lines 19 through 23 all income, including noncash income, you earned and actually or constructively received during your 2016 tax year for services you performed in a foreign country. If any of the foreign earned income received this tax year was earned in a prior tax year, or will be earned in a later tax year (such as a bonus), see the instructions. Don’t include income from line 14, column (d), or line 18, column (f). Report amounts in U.S. dollars, using the exchange rates in e�ect when you actually or constructively received the income.

If you are a cash basis taxpayer, report on Form 1040 all income you received in 2016, no matter when you performed the service.

2016 Foreign Earned Income Amount (in U.S. dollars)

19 Total wages, salaries, bonuses, commissions, etc. . . . . . . . . . . . . . . . 19 20 Allowable share of income for personal services performed (see instructions):

a In a business (including farming) or profession . . . . . . . . . . . . . . . . . 20a b In a partnership. List partnership’s name and address and type of income.

20b 21 Noncash income (market value of property or facilities furnished by employer—attach statement

showing how it was determined): a Home (lodging) . . . . . . . . . . . . . . . . . . . . . . . . . . . 21a

b Meals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21b

c Car . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21c d Other property or facilities. List type and amount.

21d 22 Allowances, reimbursements, or expenses paid on your behalf for services you performed:

a Cost of living and overseas di�erential . . . . . . . . . 22a b Family . . . . . . . . . . . . . . . . . . . . 22b c Education . . . . . . . . . . . . . . . . . . . 22c d Home leave . . . . . . . . . . . . . . . . . . 22d e Quarters . . . . . . . . . . . . . . . . . . . 22e f For any other purpose. List type and amount.

22f

g Add lines 22a through 22f . . . . . . . . . . . . . . . . . . . . . . . 22g 23 Other foreign earned income. List type and amount.

23

24 Add lines 19 through 21d, line 22g, and line 23 . . . . . . . . . . . . . . . . 24

25 Total amount of meals and lodging included on line 24 that is excludable (see instructions) . . 25 26 Subtract line 25 from line 24. Enter the result here and on line 27 on page 3. This is your 2016

foreign earned income . . . . . . . . . . . . . . . . . . . . . . . 26 Form 2555 (2016)



121,500

21,300

21,30030,390

16,208

5,092121,500

5,092

$101,300 00

101,300116,408101,300

106,392

-0-

-0-

15,108-0-

-0-

106,392

-0-

366

366

France

1. 00

1. 00

Form 2555 (2016) Page 3

Part V All Taxpayers

27 Enter the amount from line 26 . . . . . . . . . . . . . . . . . . . . . . 27 Are you claiming the housing exclusion or housing deduction?

Yes. Complete Part VI.No. Go to Part VII.

Part VI Taxpayers Claiming the Housing Exclusion and/or Deduction

28 Qualified housing expenses for the tax year (see instructions) . . . . . . . . . . . . 28 29a Enter location where housing expenses incurred (see instructions)

b Enter limit on housing expenses (see instructions) . . . . . . . . . . . . . . . 29b 30 Enter the smaller of line 28 or line 29b . . . . . . . . . . . . . . . . . . . 30 31 Number of days in your qualifying period that fall within your 2016 tax

year (see instructions) . . . . . . . . . . . . . . . . 31 days 32 Multiply $44.28 by the number of days on line 31. If 366 is entered on line 31, enter $16,208 here 32 33 Subtract line 32 from line 30. If the result is zero or less, don't complete the rest of this part or

any of Part IX . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 34 Enter employer-provided amounts (see instructions) . . . . . . 34 35 Divide line 34 by line 27. Enter the result as a decimal (rounded to at least three places), but

don't enter more than “1.000” . . . . . . . . . . . . . . . . . . . . . . 35 ×36 Housing exclusion. Multiply line 33 by line 35. Enter the result but don't enter more than the

amount on line 34. Also, complete Part VIII . . . . . . . . . . . . . . . . . 36 Note: The housing deduction is figured in Part IX. If you choose to claim the foreign earned income exclusion, complete Parts VII and VIII before Part IX.

Part VII Taxpayers Claiming the Foreign Earned Income Exclusion

37 Maximum foreign earned income exclusion . . . . . . . . . . . . . . . . . . . . . 37 38 • If you completed Part VI, enter the number from line 31.

• All others, enter the number of days in your qualifying period that fall within your 2016 tax year (see the instructions for line 31).

} 38 days

39 • If line 38 and the number of days in your 2016 tax year (usually 366) are the same, enter “1.000.” • Otherwise, divide line 38 by the number of days in your 2016 tax year and enter the result as a decimal (rounded to at least three places).

} 39 ×

40 Multiply line 37 by line 39 . . . . . . . . . . . . . . . . . . . . . . . 40 41 Subtract line 36 from line 27 . . . . . . . . . . . . . . . . . . . . . . 41 42 Foreign earned income exclusion. Enter the smaller of line 40 or line 41. Also, complete Part VIII 42

Part VIII Taxpayers Claiming the Housing Exclusion, Foreign Earned Income Exclusion, or Both

43 Add lines 36 and 42 . . . . . . . . . . . . . . . . . . . . . . . . . 43 44 Deductions allowed in figuring your adjusted gross income (Form 1040, line 37) that are allocable

to the excluded income. See instructions and attach computation . . . . . . . . . . 44

45 Subtract line 44 from line 43. Enter the result here and in parentheses on Form 1040, line 21. Next to the amount enter “Form 2555.” On Form 1040, subtract this amount from your income to arrive at total income on Form 1040, line 22 . . . . . . . . . . . . . . . . 45

Part IX Taxpayers Claiming the Housing Deduction—Complete this part only if (a) line 33 is more than line 36 and (b) line 27 is more than line 43.

46 Subtract line 36 from line 33 . . . . . . . . . . . . . . . . . . . . . . 46 47 Subtract line 43 from line 27 . . . . . . . . . . . . . . . . . . . . . . 47 48 Enter the smaller of line 46 or line 47 . . . . . . . . . . . . . . . . . . . 48

Note: If line 47 is more than line 48 and you couldn't deduct all of your 2015 housing deduction because of the 2015 limit, use the housing deduction carryover worksheet in the instructions to figure the amount to enter on line 49. Otherwise, go to line 50.

49 Housing deduction carryover from 2015 (from housing deduction carryover worksheet in theinstructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

50 Housing deduction. Add lines 48 and 49. Enter the total here and on Form 1040 to the left of line 36. Next to the amount on Form 1040, enter “Form 2555.” Add it to the total adjustments reported on that line . . . . . . . . . . . . . . . . . . . . . . . . 50

Form 2555 (2016)



Documents

Tax Forms - University of Kentuckydshuls00/phtax/Appendix_B_2018_Ed.pdf · The proprietorship uses MACRS depreciation for tax purposes. The current year tax depreciation is $27,476