Please complete the 2022 Federal income tax return for Sharp Swingers, Inc. based upon the facts presented below. If required information is missing, use reasonable assumptions to fill in the gaps. Sharp Swingers, Inc. (SW) is organized as a corporation and is taxed as a C corporation with a calendar year-end. SW owns and operates an amusement park in High Springs, Florida. High Springss weather allows SW to operate year-round. SWs address, employer identification number (EIN), and date of incorporation are as follows: Sharp Swingers, Inc. 79 Fairway High Springs, Florida 32643 EIN: 36-4385943 Date Incorporated: September 20, 2002 SW has been at the same address since inception. SW has only common shares issued (no preferred stock). SW is owned by 79 shareholders. The majority owner of SW is a large private equity firm based in Gainesville, Florida called Putters Ventures, LLC (PV). PVs address, employer identification, and other information are as follows: Putters Ventures, LLC 564 Green Grass Boulevard Gainesville, Florida 95101 EIN: 43-7182103 Page 1 of 7 PV is taxed as a partnership for federal tax purposes. PV is organized in Florida. It owns 30% of the voting stock of SW directly. No other person or entity owns directly 20% or more, or owns, directly or indirectly, more than 50% of the voting stock of SW. SW uses the accrual method of accounting. SW is not a subsidiary nor is it in an affiliated group with any other entity. SW is not audited by a CPA firm. It does, however, use GAAP-based financial statements. SW has never had a restatement of its income statement. SW reported the following information for 2022: SW did not pay dividends in excess of its current and accumulated earnings and profits. None of the stock of SW is owned by non-U.S. persons SW has never issued publicly offered debt instruments. SW is not required to file a Schedule UTP, Uncertain Tax Position Statement. SW made payments that required it to file federal Form(s) 1099. These Forms 1099 were filed timely by SW. SWs average annual gross receipts for the prior three years are under $26,000,000. None of the shareholders of SW changed during the year. SW has never disposed of more than 65% (by value) of its assets in a taxable, non-taxable, or tax deferred transaction. SW did not receive any assets in a Section 351 transfer during the year. SW elects to file a complete Schedule M-3 even if only M-1, or a partial M-3, is required. Additional information: On September 1, 2022 SW was notified by its legal counsel that SW was being sued by a former employee regarding her termination of employment from SW. On December 21, 2022, a legal settlement was reached with this terminated employee. As part of the settlement, SW agreed to pay the employee a settlement amount of $190,000 on January 10, 2023. SW accrued this expense on its 2022 financial statements. SW maintains a portfolio of tax-exempt securities (none of which is a private activity bond) and publicly traded stocks as a measure to provide immediate liquidity if needed (none of these investments is debt financed). All of these securities originate from less than 20% owned domestic corporations. SW owns 12% of Sharp Swingers of Bahamas (SWR), a Bahamian corporation operating a theme park on the outskirts of Nassau. SWR remitted dividends to SW of $14,000. SW also received $300 in dividends from holding marketable securities on occasion (all less than 20% owned by SW). From inception until this year, SWs still operates its original Golf course mower, but it has aged and does not do a good job in maintaining the grass on the golf course. To keep the grass in perfect condition, SW purchased a new Vermeer Lawn Mower. The mower was installed and rendered operational on February 27, 2022 at a cost of $6,000,000 to acquire, install, and make ready for use. Page 2 of 7 SWs regular tax depreciation for the year is correctly calculated as $1,112,499 before considering the 2022 addition of the Vermeer Lawn Mower. SW wants to claim the maximum allowable deduction for the Mower in 2022. The mower is considered personal (as opposed to real) property. SW 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 time devoted to business Percent of stock owned Amount of compensation Douglas Kayode 324-43-1231 100% .05% $235,000 Harry Charles 132-87-2131 100% .03% $195,000 Nicole Hudson 283-13-6324 100% 0% $165,000 Manuel Spinoza 623-53-3920 100% 0% $150,000 Near the end of the year, SW switched its property and casualty insurance company. As a result, the plan year for its insurance contract was altered. On December 31, 2022 SW prepaid insurance premiums of $25,000 representing coverage through February 15, 2023 as a condition of being accepted by the new company. SW did not expense any of the prepayment for financial accounting purposes. SW rents from vendors several pieces of equipment to use on its Golf course. As of December 31, 2021 and December 31, 2022, respectively, SW had prepaid vendors for equipment rental of $30,000 for January 2022 and $35,000 for January 2023. On December 26, 2022 SW prepaid a contractor $17,500 to repair several pieces of maintenance shop equipment in January of 2023. SW fully expects that the contractor will have completed the project by January 31, 2022. All the accrued wages and bonus amounts on the financial statements as of December 31, 2021 were paid on February 28, 2022. As of December 31, 2021 and 2022, respectively, SW had vacation accruals on its books of $29,000 and $35,000. As of March 15, 2022 and 2023, respectively, SW had paid $5,000 and $8,000 of those accrued amounts. On December 2, 2022, the millionth visitor entered the golf course. To recognize the accomplishment and to promote the golf course through print and radio media advertisements, SW held a give-away contest wherein the lucky visitor deemed to be the millionth visitor would be given $100,000. The check was presented to the lucky winner on January 15, 2023. The land on which SW resides is owned by the county. SW has a very favorable lease with the county that allows SW the ability to sublease any portion of the ground to another tenant. The board of Page 3 of 7 directors of SW made the decision in the fall of 2022 to seek out a tenant for unimproved land that would not be utilized in any potential expansion plans. SW identified the potential renter and entered into a contract with the renter on December 1, 2022. The rent period is to begin on January 1, 2023; however, as part of the contract, the renter was required to pay a full six-month rental amount ($50,000) to SW by December 31, 2022. SW received a check of $50,000 on December 27, 2022 from the renter. This rental payment is not refundable to the renter under any circumstances. SW maintains an inventory of several items that it uses in its golf course. Inventory is valued at cost. SW has never changed its inventory method. SW uses specific identification for its inventory. SW has never written down any subnormal goods. The rules of Section 263A (Unicap) apply to SW. The Unicap calculated costs related to ending inventory at December 31, 2021 and 2022, respectively, were $15,000 and $19,000. Total current year 263A costs were $22,610, with $18,610 included in COGS during 2022. SW does not include any of its salary and wage expenses as labor costs for COGS. On December 1, 2022, SW paid a $400,000 (total) dividend to all common stockholders. During the year, SW made Federal estimated income tax payments of $72,500 each on April 15, June 15, September 15 and December 15 of 2022 ($290,000 in total). If SW has overpaid its current year estimated taxes, it would like to apply the excess to its estimated tax payments for next year. SW is NOT a large corporation. SWs 2021 tax liability was $200,000. SW made Florida state estimated income tax payments of $15,000 each on April 15, June 15, September 15 and December 15 of 2022 ($60,000 in total). Financial Statements (kept on a GAAP basis): SHARP SWINGERS, INC. Balance Sheet Assets: 12/31/2021 12/31/2022 Cash $ 165,000 $ 129,000 Accounts Receivable 128,000 75,000 Less: Allowance for Bad Debts (43,000) (49,000) Inventory 422,000 390,000 Tax-exempt Securities 150,000 150,000 Publicly Traded Stocks 200,000 200,000 Fixed Assets 24,000,000 28,000,000 Less: Acc. Depreciation (13,542,000) (12,892,000) Prepaid Insurance 0 25,000 Prepaid Rent 30,000 35,000 Prepaid Installation Contract 0 17,500 Other Assets 150,000 250,000 Total Assets: $11,660,000 $16,330,500 Page 4 of 7 Liabilities and Shareholders Equity: Accounts Payable 48,000 62,000 Accrued Wages 123,000 118,000 Accrued Bonuses 68,500 39,000 Accrued Vacation 29,000 35,000 Legal Settlement Accrual 0 190,000 Prize Accrual 0 100,000 Unearned Rental Income 0 50,000 Note Payable-State Bank of FL (Credit Line) 1,540,000 1,084,000 Note Payable-Equipment Leasing, Inc. 7,112,000 11,728,000 Capital Stock 100,000 100,000 Additional paid-in Capital 2,000,000 2,000,000 Retained Earnings-Unappropriated 639,500 824,500 Total Liabilities and Shareholders Equity: $11,660,000 $16,330,500 Page 5 of 7 Income Statement for the period ending December 31, 2022 Item Amount Income: Gross Sales $26,523,275 Less: Returns (113,500) Net Sales 26,409,775 Cost of Goods Sold (2,052,500) Dividend Income 14,300 Interest Income 2,650 Municipal Bond Interest Income 2,300 Total Income: 24,376,525 Expenses: Employee Salaries 13,905,600 Repairs and Maintenance 492,350 Bad Debts 58,000 Rent 1,543,000 Payroll Taxes 1,112,400 Licensing Fees 10,750 Property Taxes 277,000 Interest Expense 781,000 Depreciation 1,350,000 Office Supplies 33,950 Employee Training 53,750 Safety Expenses 31,000 Political Contribution 2,500 FL Safety Commission Fine 5,000 Advertising 290,500 Admission Supplies 143,250 Meals and Entertainment 8,500 Travel 13,550 Insurance 215,000 Legal Settlement 190,000 Prize Contest Expense 100,000 Fuel 158,675 Utilities 2,530,500 Telephone 135,250 Total Expenses before taxes: $23,441,525 FL state income tax expense 60,000 Federal tax expense 290,000 Page 6 of 7 Total income taxes $350,000 Net Income: $ 585,00 Page 7 of 7