State Corporation Tax Return - Fall 2014

Using certain information from STAR, Inc., and the data provided below, prepare a North
Carolina Corporation Tax Return (Form CD-405).
ASSUMPTIONS:
STAR provided services (and therefore has Nexus) in South Carolina and Tennessee.
STAR, Inc. Taxable Income from Form 1120, line 28 = $197,000
The STAR balance sheet is as follows:
Account
Cash
Tax-exempt securities (at cost)
Marketable Securities (at cost)
Office furniture & equipment
Accumulated depreciation
Total assets

January 1, 2013
$ 86,576
52,000
120,000
65,000
( 36,576)
$ 287,000

December 31, 2013

$ 92,595
52,000
111,000
81,000
___(44,695)
$ 291,900

Nonrecourse equipment loan

Common Stock
Retained Earnings
Total liabilities and capital

$ 47,000
$ 48,000
$ 192,000
$ 287,000

$ 48,000
$ 48,000
$_ 195,900
$ 291,900

ADDITIONAL INFORMATION:

An additional $16,000 of new equipment was purchased during the year. This
equipment was 100% financed from an additional borrowing on the existing
equipment loan.
Bonus depreciation in the amount of $8,000 was claimed for tax purposes on the
new equipment but is not allowed under North Carolina tax law. Book
depreciation was $8,119 and MACRS depreciation claimed on the federal return
was $11,919 which is also allowed under North Carolina tax law.
Tax exempt income totaled $2,600 which consisted of $1,400 from Georgia-based
municipalities; and $1,200 from North Carolina-based municipalities.
Interest income totaled $2,400 as reported on the federal return which included
$1,500 of interest on federal treasury bonds (U.S. obligation)
The NAICS Code is 561900 and the Secretary of State ID is 9753642
The company made timely quarterly estimated taxes to North Carolina
Department of Revenue. The total tax paid for 2013 was $400 for Franchise
Taxes; and $9,000 for North Carolina income tax (Total tax paid of $9,400)
There was no nonapportionable income earned by the company and no Net
Economic Loss to be reported.
Include the $25 Annual Report Fee on line 27 of Schedule B

Ignore any adjustments related to contributions.

The sales apportionment factor for North Carolina is twice that of the payroll
factor and the property factor
Total sales for the company was $750,000 allocated as follows:
o North Carolina - $450,000
o South Carolina - $225,000
o Tennessee - $75,000
Total payroll for the company was $430,000. Of this amount, $120,000 was paid
to Rick Smith (president) and the remaining $310,000 was apportioned as
follows:
o North Carolina - $180,000
o South Carolina - $70,000
o Tennessee - $60,000
The company maintains office equipment in North Carolina, Tennessee, and
South Carolina. The beginning and end of year equipment values are as follows:
o Jan. 1
Dec. 31
o North Carolina
$45,000
$55,000
o South Carolina
$15,000
$19,000
o Tennessee
$ 5,000
$ 7,000
$65,000
$81,000

REQUIRED:
1. Prepare a Form CD-405 (pages 1-6) for the corporation for 2013
including Schedules A, B, C, F, H, and O. Ignore Schedules D, E, G, I, J, L, M and N.