Wolf P is an eclectic family pizza pasta restaurant that is wholly owned by John and Allie Ryan opened in tax year 2017, and now in its second year of operation The business is organized as a C Corporation under the name Wolf P Inc Their EIN is 904713872 The Ryan's files the tax information for the operations of the business on Form 1120 Wolf P uses the accrual method of accounting The restaurant has been very successful because of its reasonable pricing and family friendly environment The restaurant is also unique as patrons are given the dough and food items and can prepare their own pizzas that are then taken back for baking by the service staff The do it yourself food prep is optional, but a huge hit with families and contributes to the success of the establishment I Revenues Form 1120 Wolf P 's total cash sales in 2014 $805,398 and its total credit card charges through December 29, 2018 were $1,554,874 In addition, Wolf P also hosted a party on December 31, 2018 They could have picked up the check totaling $10,000 at 7PM on December 31 but they did not pick up the check until 2 30AM on January 1 IV Expenses a Employee Salaries Benefits John works full time managing Wolf P , and he pays himself with a form W2 The restaurant had 9 full time employees Total wages paid for the year was $734,486 Total benefits were 140,000 Included in this figure are wages and benefits for the food preparation staff for 3 employees, which totaled 75,437 for wages and 15,000 for benefits John has health insurance coverage for himself and his nine employees, at a cost of $100,000 Vehicle The business provides John with a Lexus, purchased in 2018 John uses the actual method to compute expenses The vehicle is only used for business purposes Total gas and maintenance receipts totaled $2,534 In addition, the payment of the vehicle was $1,841 per month at 0 APR b Food and Supplies Inventory Wolf P gets all its food and food supplies from the same supplier It placed and used $496,541 in food and food supplies for the year All such purchases were made on account and payable within 15 days and Wolf P 's outstanding and unpaid invoices on December 31st totaled $0 Due to an end of the year party, they depleted their entire inventory Other Expenses Wolf P paid a $1,500 fine from the health department for three health code violations They properly recorded this on their books Wolf P also bribed the health inspector for $33,500 to ignore 12 critical violations They recorded this on their books in the miscellaneous account Wolf P also paid out the following in 2018, and properly recorded this per books Merchant Account Fees$48,425 General liability and property insurance$77,000 Electric Gas Bills$19,135 Legal Accounting Fees$5,700 Advertisement Fees$13,250 Charitable Contributions$100,000 Entertainment Expenses$10,000 Meals$50,000 c Estimated Tax Payments John made estimated tax payments every quarter of the tax year He paid $40,000 per quarter totaling $120,000 for the tax year Please do not calculate any underpayment penalties V Assets Acquired in 2017 Wolf P purchased the following assets, all placed in service on 01 01 2017 Wolf P, Inc has elected out of Bonus Depreciation AssetCostProperty ClassSection 179 takenMACRS 2017MACRS 2018 New Kitchen Equipment$350,000 Furniture$35,000 Computers and software$12,000 Food Truck (not luxury)$24,000 VI Assets Acquired in 2018 Wolf P purchased the following assets, all placed in service on 6 30 2018 TRPP, Inc has elected out of Bonus Depreciation AssetCostProperty ClassSection 179 takenMACRS 2018 New Dishwasher$45,000 2018 Lexus $100,000 VII Income statement prepared for book purposes Income Statement for the year ended Dec 31, 2018 Revenues Cash and Check Sales$815,398 00 Credit Card Sales1,554,874 00 Less COGS(496,541 00) Municipal Bond Interest15,000 00 Total Revenues1,888,731 00 Total Revenues1,888,731 00 Less Total Expenses before taxes1,385,530 00 Net Income before taxes503,201 00 Less Income tax expense117,222 21 Net Income385,978 79 Form TIZ0 UN Estimated Tax for Corporations (WORKSHEET For calendar year 2019 , or tax year beginning OMB NO 1545 012 2018 , and ending OZ ' Department of the Treasury Internal Revenue Service D Go to www irs gov Form 7 120W for instructions and the latest information Keep for the corporation's records Do not send to the Internal Revenue Service 2019 Estimated Tax Computation 1 Taxable income expected for the tax year 2 Multiply line 1 by 21 ( 0 21 ) 3 Tax credits See instructions Subtract line 3 from line 2 5 Other taxes See instructions 6 Total tax Add lines 4 and 5 7 Credit for federal tax paid on fuels and other refundable credits See instructions 8 Subtract line 7 from line 6 Note If the result is less than $500 , the corporation is not required to make estimated tax payments 92 Enter the tax shown on the corporation's 2018 tax return See instructions Caution If the tax is zero or the tax year was for less than 12 months , skip this line and enter the amount from line on line 96 9 2 bo Enter the smaller of line or line 92 If the corporation is required to skip line 92 , enter the amount from line 90 ( P ) 10 Installment due dates See instructions 10 17 Required installments Enter 25 Of line 96 in columns ( a ) through ( d) If the corporation uses the annualized income installment method or adjusted seasonal installment method or is a large corporation , see the instructions for the amount to enter SCHEDULES M 1 and M 2 (Form 1120 F) Reconciliation of Income (Loss) and Analysis of OMB No 1545 0123 Unappropriated Retained Earnings per Books Department of the Treasury Internal Revenue Service Go to www irs gov Form1 120F for the latest information 2018 Name of corporation Attach to Form 1120 F Employer identification number 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 Income recorded on books this year Federal income tax per books W N not included on this return (itemize) Excess of capital losses over capital gains a Tax exempt interest $ Income subject to tax not recorded on b Other (itemize) 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) Depreciation $ a Depreciation b Charitable contributions Charitable contributions c Other (itemize) c Travel and entertainment d Other (itemize) 9 Add lines 7 and 8 6 Add lines 1 through 5 10 Income line 6 less line 9 Schedule M 2 Analysis of Unappropriated Retained Earnings per Books Balance at beginning of year 5 Distributions a Cash N Net income (loss) per books b Stock Other increases (itemize) c Property 6 Other decreases (itemize) 7 Add lines 5 and 6 Add lines 1, 2, and 3 8 4 Balance at end of year (line 4 less line 7)

Question

Wolf P  is an eclectic family pizza   pasta restaurant that is wholly owned by John and Allie Ryan opened in tax year 2017, and now in its second year of operation  The business is organized as a C Corporation under the name Wolf P  Inc  Their EIN is 904713872 The Ryan's files the tax information for the operations of the business on Form 1120  Wolf P  uses the accrual method of accounting  The restaurant has been very successful because of its reasonable pricing and family friendly environment  The restaurant is also unique as patrons are given the dough and food items and can prepare their own pizzas that are then taken back for baking by the service staff  The do it yourself food prep is optional, but a huge hit with families and contributes to the success of the establishment  I  Revenues Form 1120 Wolf P 's total cash sales in 2014 $805,398 and its total credit card charges through December 29, 2018 were $1,554,874  In addition, Wolf P  also hosted a party on December 31, 2018  They could have picked up the check totaling $10,000 at 7PM on December 31 but they did not pick up the check until 2 30AM on January 1  IV  Expenses a  Employee Salaries   Benefits John works full time managing Wolf P  , and he pays himself with a form W2  The restaurant had 9 full time employees  Total wages paid for the year was $734,486  Total benefits were 140,000  Included in this figure are wages and benefits for the food preparation staff for 3 employees, which totaled 75,437 for wages and 15,000 for benefits  John has health insurance coverage for himself and his nine employees, at a cost of $100,000  Vehicle The business provides John with a Lexus, purchased in 2018  John uses the actual method to compute expenses  The vehicle is only used for business purposes  Total gas and maintenance receipts totaled $2,534  In addition, the payment of the vehicle was $1,841 per month at 0  APR  b  Food and Supplies Inventory Wolf P  gets all its food and food supplies from the same supplier  It placed and used $496,541 in food and food supplies for the year  All such purchases were made on account and payable within 15 days and Wolf P 's outstanding and unpaid invoices on December 31st totaled $0  Due to an end of the year party, they depleted their entire inventory  Other Expenses Wolf P  paid a $1,500 fine from the health department for three health code violations  They properly recorded this on their books  Wolf P  also bribed the health inspector for $33,500 to ignore 12 critical violations  They recorded this on their books in the  miscellaneous  account  Wolf P  also paid out the following in 2018, and properly recorded this per books  Merchant Account Fees$48,425 General liability and property insurance$77,000 Electric   Gas Bills$19,135 Legal   Accounting Fees$5,700 Advertisement Fees$13,250 Charitable Contributions$100,000 Entertainment Expenses$10,000 Meals$50,000 c  Estimated Tax Payments John made estimated tax payments every quarter of the tax year  He paid $40,000 per quarter  totaling $120,000 for the tax year  Please do not calculate any underpayment penalties  V Assets Acquired in 2017 Wolf P  purchased the following assets, all placed in service on 01 01 2017  Wolf P, Inc  has elected out of Bonus Depreciation  AssetCostProperty ClassSection 179 takenMACRS 2017MACRS 2018 New Kitchen Equipment$350,000 Furniture$35,000 Computers and software$12,000 Food Truck (not luxury)$24,000 VI Assets Acquired in 2018 Wolf P  purchased the following assets, all placed in service on 6 30 2018  TRPP, Inc  has elected out of Bonus Depreciation  AssetCostProperty ClassSection 179 takenMACRS 2018 New Dishwasher$45,000 2018 Lexus $100,000 VII Income statement prepared for book purposes Income Statement for the year ended Dec 31, 2018 Revenues  Cash and Check Sales$815,398 00 Credit Card Sales1,554,874 00 Less  COGS(496,541 00) Municipal Bond Interest15,000 00 Total Revenues1,888,731 00 Total Revenues1,888,731 00 Less  Total Expenses before taxes1,385,530 00 Net Income before taxes503,201 00 Less  Income tax expense117,222 21 Net Income385,978 79 Form   TIZ0   UN Estimated Tax for Corporations (WORKSHEET For calendar year 2019 , or tax year beginning OMB NO   1545  012   2018 , and ending OZ ' Department of the Treasury Internal Revenue Service D Go to www   irs   gov   Form 7 120W  for instructions and the latest information     Keep for the corporation's records   Do not send to the Internal Revenue Service 2019 Estimated Tax Computation 1 Taxable income expected for the tax year 2 Multiply line 1 by 21   ( 0  21 )    3 Tax credits   See instructions   Subtract line 3 from line 2 5 Other taxes   See instructions 6 Total tax   Add lines 4 and 5   7 Credit for federal tax paid on fuels and other refundable credits   See instructions   8 Subtract line 7 from line 6   Note   If the result is less than $500 , the corporation is not required to make estimated tax payments     92 Enter the tax shown on the corporation's 2018 tax return   See instructions   Caution   If the tax is zero or the tax year was for less than 12 months , skip this line and enter the amount from line   on line 96    9 2 bo Enter the smaller of line   or line 92   If the corporation is required to skip line 92 , enter the amount from line       90 ( P ) 10 Installment  due dates   See instructions  10 17 Required installments     Enter 25  Of line 96 in columns ( a ) through ( d)   If the corporation uses the annualized income installment method or adjusted seasonal installment method or is a   large corporation ,  see the instructions for the amount to enter SCHEDULES M 1 and M 2 (Form 1120 F) Reconciliation of Income (Loss) and Analysis of OMB No  1545 0123 Unappropriated Retained Earnings per Books Department of the Treasury Internal Revenue Service Go to www irs gov Form1 120F for the latest information  2018 Name of corporation Attach to Form 1120 F  Employer identification number 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   Income recorded on books this year Federal income tax per books W N not included on this return (itemize)  Excess of capital losses over capital gains a Tax exempt interest $ Income subject to tax not recorded on b Other (itemize)  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)  Depreciation $ a Depreciation   b Charitable contributions Charitable contributions c Other (itemize)  c Travel and entertainment d Other (itemize)  9 Add lines 7 and 8   6 Add lines 1 through 5 10 Income line 6 less line 9 Schedule M 2 Analysis of Unappropriated Retained Earnings per Books Balance at beginning of year 5 Distributions  a Cash N Net income (loss) per books   b Stock Other increases (itemize)  c Property 6 Other decreases (itemize)  7 Add lines 5 and 6   Add lines 1, 2, and 3 8 4 Balance at end of year (line 4 less line 7)

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Wolf P. is an eclectic family pizza & pasta restaurant that is wholly owned by John and Allie Ryan opened in tax year 2017, and

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