1.  Complete Mika’s Fine Gifts, Inc., (MFG)  2017 Form 1120, Schedule D, and Schedule G (if applicable) using the information provided below.

·             Neither Form 4562 for depreciation nor Form 4797 for the sale of the equipment is required. Include the amount of tax depreciation and the tax gain on the equipment sale given in the problem (or determined from information given in the problem) on the appropriate lines on the first page of Form 1120.

·             Assume that MFG does not owe any alternative minimum tax.

·             If any information is missing, use reasonable assumptions to fill in the gaps.

In addition, you must attach supporting schedules for line items in the tax return whenever required, e.g., Line 26 of Form 1120.  DO NOT complete Form 2220:  Underpayment of Estimated Tax by Corporations.  

Facts:

Mika’s Fine Gifts, Inc., (MFG) was formed in 2007 by Rich Rones and Katie Sikes. Rich and Katie officially incorporated their store on June 12, 2008. MFG sells (retail) all kinds of fine gifts.  Rich owns 60 percent of the outstanding common stock of MFG and Katie owns the remaining 40 percent.