Express Catering, Inc. (EC) is organized in the state of New York as a corporation and is taxed as a C corporation with a calendar year-end. EC operates a delicatessen/bakery in New York City, NY that specializes in mobile food catering for events and gatherings within the tri-state area. ECs address (unchanged since inception), employer identification number (EIN), and date of incorporation are as follows:

Express Catering, Inc. 257 West 55th Avenue New York City, NY 10027 EIN: 13-9823459

Date of Incorporation: March 17, 2013 ECs address has not changed since its inception.

EC has been rapidly expanding its catering business. This expansion has required a significant amount of new equipment purchases. EC sold some of its liquid investments in order to avoid having to take on debt to fund these purchases. Further, EC invested heavily in its catering business by significantly increasing its advertising budget. EC and its officers expect that revenue increases from these expenditures will begin next year.

EC is owned by four related shareholders from the same family for the entire year: Raphael Giordano (father) and his three children Silvia, Andrea, and Marco. None of ECs shareholders are non-U.S. persons. There are currently 10,000 shares of EC common stock issued and outstanding (EC has never issued preferred stock).

The shareholders are also employees of EC and its only corporate officers. The relevant shareholder and officer information for the current year is provided below. Officer compensation is included in Employee Salaries on the income statement. Their personal information is provided below:

Raphael Giordano 160 West 57th Avenue New York City, NY 10027 SSN: 356-87-4322 Shares owned 5,500 100% of time devoted to the business, compensation of $150,000

Silvia Giordano Costa 250 South Main Hoboken, New Jersey 07030 SSN: 284-58-4583

Shares owned 1,500 100% of time devoted to the business, compensation of $130,000

Andrea Giordano 65 East 55th Avenue New York City, NY 10027 SSN: 423-84-2343 Shares owned 1,500 100% of time devoted to the business, compensation of $130,000

Marco Giordano 160 West 57th Avenue New York City, NY 10027 SSN-487-27-4797 Shares owned 1,500 100% of time devoted to the business, compensation of $120,000

EC follows the accrual method of accounting (GAAP) and is not a member of any consolidated or affiliated group of entities. EC is not audited by a CPA firm and has never had to restate its financial statement information.

Supplementary Details:

• The dividends received by EC during the year were paid by Apple, Inc. (EC owns less than 20% of Apple, Inc.s stock).

• EC had its sole municipal bond (New York City) redeemed (bought back) in the current year. EC originally purchased the New York City bonds on February 1, 2016 for $100,000 (no premium or discount paid). The bond was redeemed by New York City on February 1, 2019 for $100,000. Both tax basis and proceeds received on this transaction were reported to EC on a Form 1099-B.

• EC purchased 200 shares of Apple, Inc. on October 10, 2016 for $100,000 (including commission). On July 10, of the current year, EC sold the 200 shares of Apple, Inc. for $350 a

share (including commission). Both tax basis and proceeds received on this transaction were

reported to EC on a form 1099-B.

• During the year, EC contributed $8,000 to the American Lung Association.

• On December 10, EC paid Madison Advertising $27,500 to design a new catering advertisement

  campaign for next year. This money represented half of the total $55,000 contract price. EC

  expects that the services will be provided and delivered to EC on about June 30, 2019.

• EC prepaid an insurance premium of $21,000 in September. The new policy is effective October

  1, 2019 through September 30, 2020.

• ECs regular tax depreciation for the year is correctly calculated as $350,000 before considering

  the current year fixed asset additions of $840,000 (see table below). EC wants to claim the fastest recovery method(s) possible on these asset additions without electing any 179 expensing.

• EC acquired the following new fixed assets from unrelated parties in 2019:

• EC reports employee compensation amounts that remained unpaid at year-end in Accrued Bonuses, Accrued Vacation and Accrued Wages on the balance sheet, as applicable. The table below provides a summary of the balances in these accounts for December 31, 2018 and 2019.

Description	Date Purchased	Amount
5-year MACRS Property	October 2, 2019	$480,000
7-year MACRS Property	September 10, 2019	$320,000
Delivery Truck (over 6,000 lbs): 5-year MACRS Property	October 12, 2019	$40,000

Balance Sheet Date	Account Description	Account Balance	Applicable Employees	Payment Date
12/31/2018	Accrued Bonuses	$45,000	ECs Shareholders (father and children)	01/20/2019
12/31/2018	Accrued Vacation	$62,500	Unrelated Employees	04/01/2019 11/30/2019
12/31/2018	Accrued Wages	$44,500	ECs Shareholders (father and children)	01/20/2019
12/31/2019	Accrued Vacation	$73,000	Unrelated Employees	Unpaid as of 03/15/2020
12/31/2019	Accrued Wages	$51,500	ECs Shareholders (father and children)	01/22/2020

Supplementary Details (continued):

• On November 1, a large insurance company paid EC a $100,000 deposit to reserve catering event services on March 18, 2020 at the insurance companys annual meeting in New York City. The deposit is fully refundable until January 15, 2020. Thereafter, half of the deposit becomes non-refundable.

• Meal expenses were incurred for clients and EC staff at important meetings where business was conducted. EC did not incur any entertainment-related expenses in 2019.

EC values its inventory at cost and has always used the specific identification method for reporting purposes. The company has never written down any inventory for any reason and the rules of Section 263A (UNICAP) do not apply to EC.

EC made the following estimated Federal income tax payments: o April 15th, 2019: $2,000

o September 15th, 2019: $2,000 o June 15th, 2019: $2,000 o December 15th, 2019: $1,000

If applicable, EC wants any overpayment credited to its 2020 estimated taxes. Miscellaneous Information:

• EC did not make any dividend distributions or distributions in excess of current and accumulated earnings and profits during the current year.

• EC does not have any net operating loss carryforward amounts available for the current year.

• EC has never issued publicly offered debt instruments.

• EC is not required to file a Schedule UTP, Uncertain Tax Position Statement.

• EC made several payments during the current year that were required to be reported on Forms

  1099; all required Forms 1099 were filed timely by EC.

• EC has never disposed of more than 65% (by value) of its assets in a taxable, non-taxable, or tax-

  deferred transaction.

• EC did not receive any assets in Section 351 transfers during the year.

• ECs average annual gross receipts have never exceeded $5 million annually.

Express Catering, Inc. Financial Statements (kept on a GAAP basis):

Balance Sheet Assets:

Cash Accounts Receivable Less: Allowance for Bad Debts Inventory Publicly traded securities Tax-exempt bond U.S. Treasury Bonds Fixed Assets Less: Acc. Depreciation Prepaid Insurance Prepaid Rent Prepaid Advertising

Total Assets:

Liabilities and Shareholders Equity:

Accounts Payable Accrued Bonuses Accrued Vacation Accrued Wages Event Deposits Income Tax Payable Deferred Tax Liability Note Payable-First Bank of NY (Credit Line) Note Payable-EG Capital Equipment Leasing

Capital Stock Additional paid-in Capital Retained Earnings-Unappropriated

Total Liabilities and Shareholders Equity:

12/31/2018

62,500 145,000

(32,000) 59,000 100,000 100,000 125,000

2,115,000 (436,500) 0

38,500 0

$2,276,500

102,000 45,000 62,500 44,500

0 0 45,910

424,000 1,243,000

1,000 99,000 209,590

$2,276,500

12/31/2019

$ 1,037,000 177,000 (41,000) 96,000

0

0 125,000 2,955,000

(715,000) 15,750

39,500 27,500

$3,716,750

131,000 0

73,000 51,500 100,000 $46,820 14,000

657,000 1,415,000

1,000 99,000 1,128,430

$3,716,750

$

Income Statement for the period ending December 31, 2019

Item Income:

Gross Sales Less: Returns

Net Sales Cost of Goods Sold Gross Profit

Dividend Income Interest Income -Bank Interest Income-U.S. Treasury Municipal Bond Interest Income Capital Loss-Shares of Apple, Inc.

Total Income: Expenses:

Employee Salaries Repairs and Maintenance Bad Debts Rent Payroll Taxes Licensing Fees Property Taxes Interest Expense Depreciation Office Supplies Employee Training Employee Benefits Charitable Contribution Advertising Meals Travel Insurance Utilities Telephone Federal income tax expense/(benefit)

Total Expenses: Net Income (Loss):

Amount

$ 3,925,000 (8,500)

3,916,500 (1,129,850) 2,786,650

2,800 150 3,000 1,400

(30,000) 2,764,000

743,500 19,000 44,000

230,000 60,000 4,500 12,500

140,000 278,500 5,400

3,600 24,000 8,000 70,000 3,400

600 19,750

142,000 14,500

21,910 1,845,160 $918,840