Please assist Express Catering, Inc.'s 2018 tax return based upon the information provided below. If required information is missing, please use reasonable assumptions to fill in the gaps. Ignore any Alternative Minimum Tax (AMT) calculations and do no do any AMT related forms.
Please complete Express Catering, Inc.'s 2018 tax return based upon the information provided below. If required information is missing, use reasonable assumptions to fill in the gaps. Ignore any Alternative Minimum Tax (AMT) calculations and do not prepare any AMT related forms. EC reported the following information for the year: 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. EC's address, employer identification number (EIN), and date of incorporation are as follows: EC did not pay dividends in excess of its current and accumulated earnings and profits. None of the stock of EC is owned by non-U.S. persons EC has never issued publicly offered debt instruments EC is not required to file a Form UTP. EC made several payments in the current year that required the filing of federal Forms 1099. These Forms 1099 were filed timely by EC During the year, none of the shareholders of EC changed. 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. All of the questions on Schedule B, Form 1120 should be checked "no" for the year. Express Catering, Inc. 257 West sth Avenue New York City, NY 10027 EIN- 13-9823459 . . Date incorporated: March 17, 2011 EC's address has not changed since its inception. Additional information: EC has only common shares issued (no preferred stock). There are currently 10,000 shares of EC common stock issued and outstanding EC is owned by four shareholders from the same family: Raphael Giordano (father) and his three children Silvia, Andrea, and Marco. Their personal information is provided below: 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. Raphael Giordano 160 West 57th Avenue New York City, NY 10027 SSN: 356-87-4322 Shares owned 5,500 Despite being profitable the past few years, EC does not want to carryback net operating loss (if any) generated in the current year. Ec believes the next few years will be far more profitable and the losses will be of a greater tax benefit in the future. The dividends received by EC during the year were paid by Apple, Inc. Silvia Giordano Costa 250 South Main Hoboken, New Jersey 07030 SSN: 284-58-4583 shares owned 1,500 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, 2014 for $100,000 (no premium or discount paid). The band was redeemed by New York City on February 1, 2018 for $100,000. Both tax basis and proceeds received on this transaction were reported to EC on a form 1099-8. Andrea Giordano 65 East 55 Avenue New York City, NY 10027 SSN: 423-84-2343 Shares owned 1,500 EC purchased 200 shares of Apple, Inc. on October 10, 2014 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 1099-5 During the year, EC contributed $8,000 to the American Lung Association Marco Giordano 160 West 57 Avenue New York City, NY 10027 SSN-487-27-4797 Shares owned 1,500 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. On November 1, a large insurance company paid EC a $100,000 deposit to reserve catering event services on March 18, 2019 at the insurance company's annual meeting in New York City. The money is fully refundable until January 15, 2019. Thereafter, half of the deposit becomes non-refundable. EC prepaid an insurance premium of $21,000 in September. The new policy is effective October 1, 2018 through September 30, 2019. EC maintains an inventory of several items. Inventory is valued at cost. EC has never changed its inventory method. EC uses specific identification for its inventory. EC has never written down any subnormal goods. The rules of Section 263A (UNICAP) do not apply to EC. EC's 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 did not pay a dividend in the current year. EC made no estimated tax payments during the current year. Total current year asset additions are as follows all the equipment purchased was new): Description Date Purchased Amount 5-year MACRS Property October 2, 2018 5480.000 7-year MACRS Property September 10, 2018 $320,000 Delivery Truck (over October 12, 2018 $40,000 6,000 lbs): 5-year MACRS Property EC officer information for the year is as follows (compensation amounts included in total wages on the income statement for all employees): Name Social Security number Percent of stock owned Amount of compensation Raphael Giordano Silvia costa Andrea Giordano Marco Giordano 356-87-4322 284-58-4583 423-84-2343 487-27-4797 Percent of time devoted to business 100% 10096 100% 100% 5596 1596 15% 15% 150,000 130.000 130.000 120,000 As reported on the balance sheet (see below), on December 31, 2017 the accrued wages were $44,500 and the accrued bonuses were $45,000. The wages and bonuses were payable to Raphael, Silvia, Andrea, and Marco. These accrued wages and bonuses were paid on January 20, of 2018. Also, as reported on the balance sheet, on December 31, 2018, the accrued wages were $51,500. The wages were owed to Raphael, Silvia, Andrea, and Marco. The accrued wages were paid on January 22, 2019. All the other employees' wages and bonuses were paid on December 31, 2018. As of December 31, 2017 and December 31, 2018, respectively, EC had accrued vacation payable on its books of $62,500 and $73,000. All the 2017 vacation accrual was paid during the period from April 1 through November 30, 2018. As of March 15, 2019 EC had paid none of its 2018 accrual. All of the vacation accrual amounts for both years were owed to employees other than Raphael, Silvia, Andrea, and Marco. None of the officers had accrued vacation at December 31, 2017 or 2018. Please complete Express Catering, Inc.'s 2018 tax return based upon the information provided below. If required information is missing, use reasonable assumptions to fill in the gaps. Ignore any Alternative Minimum Tax (AMT) calculations and do not prepare any AMT related forms. EC reported the following information for the year: 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. EC's address, employer identification number (EIN), and date of incorporation are as follows: EC did not pay dividends in excess of its current and accumulated earnings and profits. None of the stock of EC is owned by non-U.S. persons EC has never issued publicly offered debt instruments EC is not required to file a Form UTP. EC made several payments in the current year that required the filing of federal Forms 1099. These Forms 1099 were filed timely by EC During the year, none of the shareholders of EC changed. 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. All of the questions on Schedule B, Form 1120 should be checked "no" for the year. Express Catering, Inc. 257 West sth Avenue New York City, NY 10027 EIN- 13-9823459 . . Date incorporated: March 17, 2011 EC's address has not changed since its inception. Additional information: EC has only common shares issued (no preferred stock). There are currently 10,000 shares of EC common stock issued and outstanding EC is owned by four shareholders from the same family: Raphael Giordano (father) and his three children Silvia, Andrea, and Marco. Their personal information is provided below: 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. Raphael Giordano 160 West 57th Avenue New York City, NY 10027 SSN: 356-87-4322 Shares owned 5,500 Despite being profitable the past few years, EC does not want to carryback net operating loss (if any) generated in the current year. Ec believes the next few years will be far more profitable and the losses will be of a greater tax benefit in the future. The dividends received by EC during the year were paid by Apple, Inc. Silvia Giordano Costa 250 South Main Hoboken, New Jersey 07030 SSN: 284-58-4583 shares owned 1,500 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, 2014 for $100,000 (no premium or discount paid). The band was redeemed by New York City on February 1, 2018 for $100,000. Both tax basis and proceeds received on this transaction were reported to EC on a form 1099-8. Andrea Giordano 65 East 55 Avenue New York City, NY 10027 SSN: 423-84-2343 Shares owned 1,500 EC purchased 200 shares of Apple, Inc. on October 10, 2014 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 1099-5 During the year, EC contributed $8,000 to the American Lung Association Marco Giordano 160 West 57 Avenue New York City, NY 10027 SSN-487-27-4797 Shares owned 1,500 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. On November 1, a large insurance company paid EC a $100,000 deposit to reserve catering event services on March 18, 2019 at the insurance company's annual meeting in New York City. The money is fully refundable until January 15, 2019. Thereafter, half of the deposit becomes non-refundable. EC prepaid an insurance premium of $21,000 in September. The new policy is effective October 1, 2018 through September 30, 2019. EC maintains an inventory of several items. Inventory is valued at cost. EC has never changed its inventory method. EC uses specific identification for its inventory. EC has never written down any subnormal goods. The rules of Section 263A (UNICAP) do not apply to EC. EC's 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 did not pay a dividend in the current year. EC made no estimated tax payments during the current year. Total current year asset additions are as follows all the equipment purchased was new): Description Date Purchased Amount 5-year MACRS Property October 2, 2018 5480.000 7-year MACRS Property September 10, 2018 $320,000 Delivery Truck (over October 12, 2018 $40,000 6,000 lbs): 5-year MACRS Property EC officer information for the year is as follows (compensation amounts included in total wages on the income statement for all employees): Name Social Security number Percent of stock owned Amount of compensation Raphael Giordano Silvia costa Andrea Giordano Marco Giordano 356-87-4322 284-58-4583 423-84-2343 487-27-4797 Percent of time devoted to business 100% 10096 100% 100% 5596 1596 15% 15% 150,000 130.000 130.000 120,000 As reported on the balance sheet (see below), on December 31, 2017 the accrued wages were $44,500 and the accrued bonuses were $45,000. The wages and bonuses were payable to Raphael, Silvia, Andrea, and Marco. These accrued wages and bonuses were paid on January 20, of 2018. Also, as reported on the balance sheet, on December 31, 2018, the accrued wages were $51,500. The wages were owed to Raphael, Silvia, Andrea, and Marco. The accrued wages were paid on January 22, 2019. All the other employees' wages and bonuses were paid on December 31, 2018. As of December 31, 2017 and December 31, 2018, respectively, EC had accrued vacation payable on its books of $62,500 and $73,000. All the 2017 vacation accrual was paid during the period from April 1 through November 30, 2018. As of March 15, 2019 EC had paid none of its 2018 accrual. All of the vacation accrual amounts for both years were owed to employees other than Raphael, Silvia, Andrea, and Marco. None of the officers had accrued vacation at December 31, 2017 or 2018
