West Instrument Sales, Inc. is located at 5500 Fourth Avenue, City, ST XXXXXXXXXXThe corporation is...

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West Instrument Sales, Inc. is located at 5500 Fourth Avenue, City, ST XXXXXXXXXXThe corporation is a calendar year taxpayer and uses the accrual basis of accounting for book and tax purposes. It is engaged in the sale of musical instruments with an employer identification number (EIN) of XXXXXXXXXXThe company was incorporated on December 31, 2001 and began business on January 2, 2012. Table 1 contains balance sheet information. Table 2 includes the income statement for 2015. Taxable income in 2014 was $1.2 million and the 2014 federal tax was $408,000. In 2015, the corporation earned its taxable income evenly throughout the year. It does not use the annualization or seasonal method for purposes of determining its estimated payment requirements. The corporation uses the periodic inventory method and prices its inventory using the lower of FIFO cost or market. It is exempt from the uniform capitalization rules. Officers’ compensation is included below. For tax purposes, the corporation uses the direct write-off method of deducting bad debts. For book purposes, the corporation uses an allowance method. During 2015, the corporation recorded $32,000 of bad debt expenses for books. This amount was also the actual write-offs for 2015. The company sold 100 shares of PDG Corporation common stock on October 7, 2015 for $75,000. The stock was acquired on December 15, 2014 for $50,000. The corporation also sold 75 shares of JSB Corporation, common stock on June 17, 2015 for $60,000. The JSB stock was acquired on September 18, 2013 for $68,000. The corporation has a $10,000 capital loss carryover form 2014. All fixed assets are MACRS property and are detailed below. In addition to the assets listed below, a new pieces of equipment (Equipment 3) was acquired on October 17, 2015. The new equipment cost $600,000 and will be depreciated over 7 years. Other Information: 1. The company’s activities do not qualify for the qualified production activities deduction. 2. Ignore AMT and the accumulated earnings tax. 3. The corporation received dividends from a taxable, domestic corporation which is less than

Robert · Accepted Answer

Form 1125-E (December 2012)
Form   1125-E
(Rev. December 2012)
Department of the Treasury  
Internal Revenue Service 
Compensation of Officers
▶ Attach to Form 1120, 1120-C, 1120-F, 1120-RIC, or 1120-REIT.  
▶ Information about Form 1125-E and its separate instructions is at www.irs.gov/form1125e.
OMB No. 1545-2225
Name Employer identification number
Note. Complete Form 1125-E only if total receipts are $500,000 or more. See instructions for definition of total receipts.
(a) Name of officer (b) Social security number
(c) Percent of 
time devoted to 
business
Percent of stock owned (f) Amount of 
compensation         (d) Common (e) Preferred    
1 % % % 
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2 Total compensation of officers . . . . . . . . . . . . . . . . . . . . . . . 2 
3 Compensation of officers 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 the
appropriate line of your tax return . . . . . . . . . . . . . . . . . . . . . . 4 
For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 55989C Form 1125-E (Rev. 12-2012)
Version A, Cycle 3
 Internal Use Only
DRAFT AS OF
July 29,

West Instrument Sales, Inc. is located at 5500 Fourth Avenue, City, ST XXXXXXXXXXThe corporation is a calendar year taxpayer and uses the accrual basis of accounting for book and tax purposes. It is...

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