FORM 1125-E. Hi, I need help on Form 1125-E. The total compensation for the workers is 753,000, but I do not understand how to allocate it to each officer (Rachael, Paula, Gordon). The attachment will give information on the assignment. I only need help with the 1125-E form, thank you!

Celebrity Catering Services, Inc. Rachael Ray, Paula Deen and Gordon Ramsay each own one-third of the common stock of Celebrity Catering Services, Inc. (CCS). CCS was incorporated on February 2, 2009. It has only one class of stock outstanding and operates as a C corporation for tax purposes. CCS caters to all types of social events. CCS is located at 540 Waverly Way Burbank, CA 91501 Its employer ID is 38-4743474 CCS's business activity is catering food services. Its business activity code is 722300. The shareholders also work as officers for the corporation as follows: O Rachael is the chief executive officer and president, (SS# 231-54-8976). o Paula is the executive VP and Chief operating officer (SS#798-56-3241). o Gordon is the VP of Finance (SS# 879-21-4536). All officers devote 100% of their time to the business and all of the officers are US citizens. CCS uses the accrual method of accounting and has a calendar year-end. CCS made four equal quarterly estimated tax payments of $37,000 each. Its tax liability last year was $140,800. If it has over paid its federal tax liability, CCS would like to receive a refund. In the prior year, the company made a large charitable contribution. $45,000 of that contribution exceeded the amount deductible and was carried forward to the current year. CCS paid a dividend of $155,000 to each of its shareholders on December 1. CCS had ample earnings and profits (E&P) to absorb the distribution. Income Statement [1] $3,532,000 -35,000 3,497,000 1,075,700 2,421,300 -$1,000 32,000 8,200 $2,460,500 [2] [3] [4] Income Sales Sales returns and allowances Net sales Cost of goods sold Gross profit Net Loss on Sale of Assets & Investments Dividend income Interest income Total income Expenses Salaries and wages Bad Debt Meals Entertainment Repairs and Maintenance Property Taxes State Income Tax Payroll Taxes Charitable Contribution Equipment Rent Warehouse Rent Interest Advertising Professional Services Depreciation Employee benefits Programs Other Miscellaneous Expenses Total expenses Net income before taxes Federal income taxes Net income after taxes 952,000 19,000 16,000 14,000 18,500 6,200 20,000 173,200 62,000 60,000 125,000 6,800 72,000 32,500 15,200 69,000 28,700 1,690,100 $ 770,400 - 163,464 $606,936 (1) CCS'S inventory-related purchases during the year were $242,000 and direct labor of $855,000. It values its inventory based on cost using FIFO inventory cost flow method. CCS must use the 263A method for valuing its inventory for tax purposes the beginning balance of 263A adjustment is $12,000 and the ending value is $9,000. The current year additional 9263A costs are $87,000 of the officer's salary. [2] CCS's dividend income came from Sinful Desserts, Inc. (SD) CCS owned 10,000 shares of stock in SD at the beginning of the year this represented 16% of SD's outstanding stock. [3] $1,200 was from a City of Irvine bond that was used to fund public activities (issued in 2006), $1,500 was from an Oceanview City bond used to fund public activities (issued in 2005), $1,000 was from a US Treasury Bond and the rest was from a money market account at Bank of America. [4] The officers' salaries included are: Rachael Ray -$325,000; Paula Deen - $ 240,000 and Gordon Ramsey - $275,000 (5) The interest expense was from an ordinary and necessary deductible business loan. [6] None of the depreciation will be claimed on 1125A. The MACRS depreciation has been computed as $ 13,400 for assets not purchased during the current fiscal year. The straight-line depreciation method is reflected on the financial statements. [7] Includes $4,200 for premiums paid on term life insurance policies for which CCS is the beneficiary. The policies cover Rachael, Paula and Gordon. Also included is $500 in parking tickets. The rest are regular miscellaneous, ordinary and necessary expenses. Balance Sheet 7/1/2018 $408,300 566,000 -63,000 150,000 Assets Cash Trade and accounts receivables Allowance for Doubtful Accounts Inventories U.S. government bonds State & Local bonds Investment In Stock Prepaid Federal Income Taxes Property, plant and equipment Accumulated depreciation Other assets Total Assets Liabilities and Owners' Equity Accounts payable Income Taxes Payable Deferred Tax Liability Other current liabilities Other Liabilities Capital stock Retained earnings Total Liabilities and Owners' Equity [2] 6/30/19 $523,000 468,000 -57,000 (1) 171,300 20,000 120,000 314,000 0 180,000 [3] -69,200 [4] 37,600 $1,707,700 20,000 120,000 354,000 0 160,000 - 64,000 25,000 $1,676,300 $ 153,700 37,612 15,371 21,000 43,000 400,000 1,005,617 $1,676,300 $70,312 3,469 27,366 21,000 38,000 400,000 ,147,553 1,707,700 1 [1] CCS wrote off $26,000 as uncollectible during the year. [2] On October 1, 2018 CCS sold 1,000 shares of SD stock for $42,000. It had originally purchased these shares on April 18, 2010 for $40,000. After the sale CCS owns 14.4 percent of SD. [3] On November 12, 2018 CCS purchased three industrial Hobart mixers for $5,500 each and a Wolf Convection Double Stack Commercial Oven for $17,500. [4] On December 5, 2018 they sold two old mixers that had been fully depreciated for tax purposes but had a book value of $2,000 each. The old mixers had been purchased at $7,000 each and were sold for $500 each. Celebrity Catering Services, Inc. Rachael Ray, Paula Deen and Gordon Ramsay each own one-third of the common stock of Celebrity Catering Services, Inc. (CCS). CCS was incorporated on February 2, 2009. It has only one class of stock outstanding and operates as a C corporation for tax purposes. CCS caters to all types of social events. CCS is located at 540 Waverly Way Burbank, CA 91501 Its employer ID is 38-4743474 CCS's business activity is catering food services. Its business activity code is 722300. The shareholders also work as officers for the corporation as follows: O Rachael is the chief executive officer and president, (SS# 231-54-8976). o Paula is the executive VP and Chief operating officer (SS#798-56-3241). o Gordon is the VP of Finance (SS# 879-21-4536). All officers devote 100% of their time to the business and all of the officers are US citizens. CCS uses the accrual method of accounting and has a calendar year-end. CCS made four equal quarterly estimated tax payments of $37,000 each. Its tax liability last year was $140,800. If it has over paid its federal tax liability, CCS would like to receive a refund. In the prior year, the company made a large charitable contribution. $45,000 of that contribution exceeded the amount deductible and was carried forward to the current year. CCS paid a dividend of $155,000 to each of its shareholders on December 1. CCS had ample earnings and profits (E&P) to absorb the distribution. Income Statement [1] $3,532,000 -35,000 3,497,000 1,075,700 2,421,300 -$1,000 32,000 8,200 $2,460,500 [2] [3] [4] Income Sales Sales returns and allowances Net sales Cost of goods sold Gross profit Net Loss on Sale of Assets & Investments Dividend income Interest income Total income Expenses Salaries and wages Bad Debt Meals Entertainment Repairs and Maintenance Property Taxes State Income Tax Payroll Taxes Charitable Contribution Equipment Rent Warehouse Rent Interest Advertising Professional Services Depreciation Employee benefits Programs Other Miscellaneous Expenses Total expenses Net income before taxes Federal income taxes Net income after taxes 952,000 19,000 16,000 14,000 18,500 6,200 20,000 173,200 62,000 60,000 125,000 6,800 72,000 32,500 15,200 69,000 28,700 1,690,100 $ 770,400 - 163,464 $606,936 (1) CCS'S inventory-related purchases during the year were $242,000 and direct labor of $855,000. It values its inventory based on cost using FIFO inventory cost flow method. CCS must use the 263A method for valuing its inventory for tax purposes the beginning balance of 263A adjustment is $12,000 and the ending value is $9,000. The current year additional 9263A costs are $87,000 of the officer's salary. [2] CCS's dividend income came from Sinful Desserts, Inc. (SD) CCS owned 10,000 shares of stock in SD at the beginning of the year this represented 16% of SD's outstanding stock. [3] $1,200 was from a City of Irvine bond that was used to fund public activities (issued in 2006), $1,500 was from an Oceanview City bond used to fund public activities (issued in 2005), $1,000 was from a US Treasury Bond and the rest was from a money market account at Bank of America. [4] The officers' salaries included are: Rachael Ray -$325,000; Paula Deen - $ 240,000 and Gordon Ramsey - $275,000 (5) The interest expense was from an ordinary and necessary deductible business loan. [6] None of the depreciation will be claimed on 1125A. The MACRS depreciation has been computed as $ 13,400 for assets not purchased during the current fiscal year. The straight-line depreciation method is reflected on the financial statements. [7] Includes $4,200 for premiums paid on term life insurance policies for which CCS is the beneficiary. The policies cover Rachael, Paula and Gordon. Also included is $500 in parking tickets. The rest are regular miscellaneous, ordinary and necessary expenses. Balance Sheet 7/1/2018 $408,300 566,000 -63,000 150,000 Assets Cash Trade and accounts receivables Allowance for Doubtful Accounts Inventories U.S. government bonds State & Local bonds Investment In Stock Prepaid Federal Income Taxes Property, plant and equipment Accumulated depreciation Other assets Total Assets Liabilities and Owners' Equity Accounts payable Income Taxes Payable Deferred Tax Liability Other current liabilities Other Liabilities Capital stock Retained earnings Total Liabilities and Owners' Equity [2] 6/30/19 $523,000 468,000 -57,000 (1) 171,300 20,000 120,000 314,000 0 180,000 [3] -69,200 [4] 37,600 $1,707,700 20,000 120,000 354,000 0 160,000 - 64,000 25,000 $1,676,300 $ 153,700 37,612 15,371 21,000 43,000 400,000 1,005,617 $1,676,300 $70,312 3,469 27,366 21,000 38,000 400,000 ,147,553 1,707,700 1 [1] CCS wrote off $26,000 as uncollectible during the year. [2] On October 1, 2018 CCS sold 1,000 shares of SD stock for $42,000. It had originally purchased these shares on April 18, 2010 for $40,000. After the sale CCS owns 14.4 percent of SD. [3] On November 12, 2018 CCS purchased three industrial Hobart mixers for $5,500 each and a Wolf Convection Double Stack Commercial Oven for $17,500. [4] On December 5, 2018 they sold two old mixers that had been fully depreciated for tax purposes but had a book value of $2,000 each. The old mixers had been purchased at $7,000 each and were sold for $500 each