Anti Virus Inc was formed in early 2019, funded by some venture capitalists who owns 90% of the company stock and the other 10% is owned by the top five officers of the Corporation (each hold 2%).

AVI rents thebasement in the Trump Hotel - 1100 Pennsylvania Ave NW Washington, DC 20001 is the address for the headquarters of AVI, which was incorporated in Delaware, on 1/1/2019 and the EIN# is 54-3516549.

AVI somehow was tipped off to the potential for a catastrophic virus that was rumored to be causing early stage havoc in China.They act as a distributor of "tests" to check this virus.They have a number of suppliers in India and Russia for these test packets.AVI buys from their suppliers and sells throughout the USA. Business began to boom. They hold almost NO INVENTORY - they just act as the middleman. They want us to do their tax return for 2019.Here's what they gave me for their 2019 first year of operations:

Financial Statement:

Gross Sales $150 million

Cost of Sales $80 million

Selling and Marketing costs $50 million

Administrative costs $10 million

Interest income $1 million

Dividend Income $2 million (small 10% investment in TRUMP CORP)

Net Profit Pre Tax is $13 million

Tax per Books was 2 million

Net profit after tax was $11 million

Breakdown of expenses:

Selling and marketing costs - Bribes to Local Hospital Officials $1 million

Bribes to 4 US Senators $2 million (each guy got $500,000 for helping AVI become the "leading supplier of virus tests!)

Bribes to the suppliers in India and Russia were $20 million in total! (these suppliers WERE going to sell to the Chinese UNTIL AVI saved the day and got them to supply the USA - it just took a little "payola!").

Fine levied by the US government against AVI was $15 million under the Foreign Corrupt Practice Act for bribing those foreign countries!Ughh!

Advertising costs - $5,000,000

Sales commissions to employees - $1,500,000

Salaries to salespeople - $5 million

Depreciation - 100% bonus depreciation was taken on the SUPER ANTIVIRUS VEHICLES used to deliver the test kits.This depreciation for tax was $2,500,000, the costs of these vehicles.For book purposes $500,000 of depreciation expense was recorded since the company estimated a 5 year life on these assets that cost $2.5 million.

Administration costs: included in the $10 million are

Officer Comp $5 million (each officer got $1 million!)

Fringe benefits - $1 million

Pensions, etc - $1 million

Other salaries $1 million

Entertainment $500,000

Meals $200,000 (assume 1/2 of these meals can be deducted for tax purposes)

Rental of Building - Headquarters $300,000

Donations to various universities (keep those professors happy!) - $200,000

State tax expenses $300,000

Start up costs $180,000

Miscellaneous other costs - $320,000.

Breakdown of Other things?

The interest income of $1 million included $500,000 from an investment in State of California Bonds and another $400,000 from investment in State of New York Bonds.The balance of $100,000 was interest received from an investment into a Russian Bank.

Also, they told me they paid a $5 million dividend - $4.5 to the VC company and the remaining $500,000 was paid $100,000 to each of the 5 officers.Paid on Christmas day - 12/25/2019.The VC company was based in South Korea, by the way.The VC company was funded significantly by Banco De Milano (75% investment; the other 25% of the VC was held by businessmen in Hong Cong), based of course in Italy.

Finally - THEY PAID NO TAX to the FEDERAL GOVERNMENT in the USA - at least not YET!BUT they did pay that state tax I mentioned above! (I think they would be granted a federal tax exemption by their friends in Congress - sort of like a "bail out!")

THAT'S ALL I GOT FOR NOW !

Use this data and the excel spreadsheet (if you want as a guide) to answer and complete the following:

1.Complete the Schedule M-1

Schedule M-1 Reconciliation of Income (Loss) per Books With Income per Return Note: The corporation may be required to file Schedule M-3. See instructions. Net income (loss) per books . 7 Income recorded on books this year 2 Federal income tax per books not included on this return (itemize): 3 Excess of capital losses over capital gains Tax-exempt interest $ Income subject to tax not recorded on books this year (itemize): 8 Deductions on this return not charged 5 Expenses recorded on books this year not against book income this year (itemize): deducted on this return (itemize): a Depreciation $ a Depreciation $ b Charitable contributions $ b Charitable contributions $ c Travel and entertainment . $ 9 Add lines 7 and 8 6 Add lines 1 through 5 . 10 Income (page 1, line 28)-line 6 less line 9