Zeus, Inc. Is Organized As A Corporation And Taxed As A C ✓ Solved

Zeus, Inc. is organized as a corporation and is taxed as a C corporation with a calendar year end

Zeus, Inc. is a corporation operating an amusement park in Los Angeles, California, incorporated on July 1, 2010. The company has 77 shareholders, none of whom own 20% or more, directly or indirectly, and no ownership is foreign-held. It uses the accrual method of accounting and prepares GAAP-based financial statements, opting to file a complete Schedule M-3 despite its gross receipts being under $26 million annually.

For 2020, Zeus, Inc. made payments requiring federal Form 1099 filings, which were completed timely. The company's financial position was impacted by a legal settlement involving a former employee, whom Zeus agreed to pay $190,000 on January 10, 2021, accrued as an expense during the 2020 financial year. The company owns a 12% stake in Fun Fair of Russia, which paid dividends of $14,000, and received $300 in dividends from marketable securities held less than 20% ownership.

The amusement park's main attraction, Zip Coaster, aged and declined in appeal, prompting Zeus to acquire a new ride, the Swirlwind, installed and operational on March 1, 2020, at a cost of $6 million. Zeus rents its amusement equipment from vendors; as of December 31, 2019, and 2020, prepaid rent expenses were $30,000 and $35,000 respectively, for January 2020 and 2021. Additionally, Zeus fully prepaid a contractor $17,500 on December 26, 2020, for repairs expected to be completed by January 31, 2021.

Regarding accrued expenses, Zeus recorded vacation accruals of $29,000 and $35,000 at the end of 2019 and 2020. The company held a promotional advertising giveaway worth $100,000 on December 2, 2020. It also rents out part of its land and received a rent payment of $50,000 on December 27, 2020, covering the six months starting January 1, 2021, under a lease agreement that explicitly states the rent is nonrefundable under any circumstances.