After proving yourself as a tax researcher and capable of handling the most challenging individual tax clients, Debbie has promoted you to the Corporate Taxation Department

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After proving yourself as a tax researcher and capable of handling the most
challenging individual tax clients, Debbie has promoted you to the Corporate
Taxation Department. Congratulations! She encourages you to spend considerable
time reading corporate tax laws and reviewing files for the firm's corporate tax
clients. To begin, Debbie assigns you to one of the firm's oldest clients; the
Cleveland American Manufacturing Company. Members of the firm refer to the
Cleveland American Manufacturing Company by the acronym CAMCO. At reminds
you that she is available to help you succeed at Tax Pros CPA Firm and to contact
her if you have any questions.
You begin by reviewing the tax file Debbie had delivered to your office.
CAMCO's tax file includes the following relevant facts:
? Its legal name is the Cleveland American Manufacturing Company
? Incorporated as a regular "C" corporation on July 1, 2010
? Address: 175 Vine Street, Cleveland, Ohio 44111.
? EIN Number: 34-123456
? It manufactures fishing gear
? Its Business Activity Code is 339900 for "other manufacturing
Key Financial Information
Total assets $15,000,000
Sales 3,000,000
Net Income "per Books" 840,000
Inventory, beginning 200,000
Inventory, ending 200,000
Purchases 1,200,000
Cost of Goods Sold 1,200,000
Inventory is valued at Cost using the FIFO
inventory cost flow method
All non-inventory expenses are reported
using the Cash basis method
CAMCO is owned by a single shareholder, Jan Goetz. Her Social Security number is
333-55-3333. Last year, Jan's salary as President was $300,000, salaries and wages
paid to other CAMCO employees totaled $450,000. In addition, CAMCO paid $50,000
to rent its manufacturing plant, $100,000 to advertise, and $90,000 for repairs and
maintenance.