Posted: September 13th, 2017

Corporate tax : Liquidation and non-liquidation

Project description
King Corporation, an accrual method taxpayer, reports the following results for 2011:
Regular taxable income before regular tax NOL deduction
$800,000
Minus: Regular tax NOL deduction
(200,000)
Regular taxable income
$600,000
Alternative tax NOL deduction
$175,000
AMT depreciation adjustment
$148,000
Personal property acquired eight years ago and sold this year:
Acquisition cost
$50,000
Regular tax depreciation
$38,845
AMT depreciation
$26,845
Increase in LIFO recapture amount
$75,000
Tax-exempt interest income:
Private activity bonds (not issued in 2009 or 2010)
$31,000
Other bonds (not issued in 2009 or 2010)
$33,000
Dividends received (less than 1% ownership)
$120,000
Dividends paid
$110,000

Task: King Corporation Tax Return
Read the scenario and data below, and then prepare Form 4626 for King Corporation.
Click here to view the table that shows King Corporation financial results.
King is not a small corporation exempt from the alternative minimum tax (AMT), and it has no AMT adjustment for the U.S. production activities deduction. Regular taxable income includes

$35,000 of Sec. 1231 gain from a prior year installment sale on which King’s total realized gain was $350,000. Regular taxable income also includes $39,000 of Sec. 1231 gain from a 2011

installment sale on which King’s total realized gain is $195,000. King’s ACE adjustments for prior years are a net positive $500,000. Prepare Form 4626 for King Corporation to report its 2011 AMT

liability (if any). Form 4626 can be found at: http://www.irs.gov/pub/irs-pdf/f4626.pdf

Submission Requirements:
Please submit the completed assessment to the Week 2 assessment area as a Word attachment.
Submit your calculations in a Microsoft Word document.
Show step-by-step solutions to all calculations.
Font: Arial, 12 point
Line spacing: double
Submit a PDF copy of the completed Form 4626.
Evaluation Criteria:
Exercise will be graded for accuracy.

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