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 (This section may be helpful to fill out by hand first)

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 (This section may be helpful to fill out by hand first)

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 1120 (2018) Page 3 Tax Com utation and Pa ment see instructions Part l-Tax Com - utation .4 .L O Gonowgl-hh'l a? O QDU'I'I BREE Check if the corporation is a member of a controlled group (attach Schedule 0 (Form 1120)). See instructions F El Income tax. See instructions Base erosion minimum tax (attach Form 8991) Add lines 2 and 3.. . Foreign tax credit (attach Form 11 18). Credit from Form 8834 (see instructions) General business credit (attach Form 3800) Credit for prior year minimum tax (attach Form 8827) Bond credits from Form 8912 Total credits. Add lines 5a through 5e Subtract line 8 from line 4 . Personal holding company tax (attach Schedule PH (Form 1120)). Recapture of investment credit (attach Form 4255) Flecapture of low-income housing credit (attach Form 8811) Interest due under the look-back methodcompleted long -term contracts (attach Form 8897) . Interest due under the look-back methodincome forecast method (attach Form 8888) . . . . . . . Alternative tax on qualifying shipping activities (attach Form 8902) Other (see instructions attach statement) Total. Add lines 9a through 9f . . . Totaltax. Add lines 7 8. and 10. Enter here and on o-ae1. line 31 2017 overpayment credited to 2018 2018 estimated tax payments . . 2018 refund applied for on Form 4488 . Combine lines 13. 14. and 15 . Tax deposited with Form 7004 . Withholding (see instructions) Total payments. Add lines 18. 17. and 18 Refundable credits from: Form 2439 . Form 4138 . . . Form 8827. line 8c Other (attach statementsee instructions) Total credits. Add lines 20a through 20d. . . 2018 net 985 tax liability from Form 985- B. Part I column (cl). line 2. See instructions . Total payments, credits, and section 965 net tax liability. Add lines 19. 21. and 22. Enter here and on page 1. line33 . Form 1120 U.S. Corporation Income Tax Return OMB No. 1545-0123 Department of the Treasury For calendar year 2018 or tax year beginning , 2018, ending 20 Internal Revenue Service Go to www.irs.gov/Form 1 120 for instructions and the latest information. 2018 A Check if Name B Employer identification number la Consolidated return (attach Form 851) b Lifeonlife consoli- TYPE et, and room or suite no. If a P.O. box, see instructions Date incorporated dated return . OR 2 Personal holding co PRINT (attach Sch. PH) . City or town, state or province, country, and ZIP or foreign postal code D Total assets (see instructions) 3 Personal service corp see instructions) S 4 Schedule M-3 attached E E Check if: (1) Initial return 2) Final return 3) Name change 4) Address change la Gross receipts or sales 1a a Returns and allowances . 1b Balance. Subtract line 1b from line 1a Cost of goods sold (attach Form 1125-A) 2 Gross profit. Subtract line 2 from line 1c . Dividends and inclusions (Schedule C, line 23, column (a)) . Income LO Interest Gross rents Gross royalties CO Capital gain net income (attach Schedule D (Form 1120)) . CO Net gain or (loss) from Form 4797, Part II, line 17 (attach Form 4797) 10 Other income (see instructions-attach statement) 11 Total income. Add lines 3 through 10 12 Compensation of officers (see instructions-attach Form 1125-E) 13 Salaries and wages (less employment credits) Repairs and maintenance Bad debts Rents Taxes and licenses Interest (see instructions) Charitable contributions . Depreciation from Form 4562 not claimed on Form 1125-A or elsewhere on return (attach Form 4562) Deductions (See instructions for limitations on deductions.) Depletion Advertising Pension, profit-sharing, etc., plans &NN ? Employee benefit programs Reserved for future use . Other deductions (attach statement) 26 Total deductions. Add lines 12 through 26 27 Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line 11. Net operating loss deduction (see instructions) 29a Special deductions (Schedule C, line 24, column (c)) 29b Add lines 29a and 29b 29c Taxable income. Subtract line 29c from line 28. See instructions 30 Total tax (Schedule J, Part I, line 11) . 31 2018 net 965 tax liability paid (Schedule J, Part II, line 12) . 32 Total payments, credits, and section 965 net tax liability (Schedule J, Part III, line 23) . 33 85 8 8 8 8 85 Tax, Refundable Credits, and Payments Estimated tax penalty. See instructions. Check if Form 2220 is attached 34 Amount owed. If line 33 is smaller than the total of lines 31, 32, and 34, enter amount owed 35 Overpayment. If line 33 is larger than the total of lines 31, 32, and 34, enter amount overpaid 36 Enter amount from line 36 you want: Credited to 2019 estimated tax Refunded 37 Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct Sign and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. May the IRS discuss this return Here with the preparer shown below? Signature of officer Title See instructions. Date Yes No Paid Print/Type preparer's name Preparer's signature Date Check if PTIN Preparer self-employed Use Only Firm's name Firm's EINForm 1 120 ( 2018 )| Page 2 SONG` `` @ Dividends , Inclusions , and Special Deductions ( see ( a) Dividends and instructions ) inclusions ( b ) % ( c ) Special deductions ( 2 ) x ( b )| Dividends from less- than - 20%- owned domestic corporations ( other than debt- financed stock )| 50 2 Dividends from 20% - or- more-owned domestic corporations ( other than debt-financed Stock )\\ 65 see instruction 3 Dividends on certain debt-financed stock of domestic and foreign corporations Dividends on certain preferred stock of less - than - 20% - owned public utilities* 23.3 Dividends on certain preferred stock of 20 %/ - or - more- owned public utilities . 26.7 Dividends from less- than - 20% - owned foreign corporations and certain FSCS* 50 Dividends from 20% - or - more -owned foreign corporations and certain FSCS 65 8 Dividends from wholly owned foreign subsidiaries* 100 see Subtotal . Add lines 1 through 8 . See instructions for limitations\\ instruction 10 Dividends from domestic corporations received by a small business investment company operating under the Small Business Investment Act of 1958 100 17 Dividends from affiliated group members . 100 Dividends from certain FSCS\\ 100 13 Foreign- source portion of dividends received from a specified 10%-owned foreign 100 corporation ( excluding hybrid dividends ) ( see instructions ) .` 74 Dividends from foreign corporations not included on line 3 , 6 , 7 , 8 , 11 , 12 , or 13 ( including any hybrid dividends ) .` see Section 965 ( a ) inclusion . instruction 75 162 Subpart F inclusions derived from the sale by a controlled foreign corporation ( CFC ) of 700 the stock of a lower-tier foreign corporation treated as a dividend ( attach Form ( 5 ) 5471 ) ( see instructions ) .\\ a Subpart F inclusions derived from hybrid dividends of tiered corporations ( attach Form ( s ) 5471 ) ( see instructions ) . C Other inclusions from CFC's under subpart F not included on line 15 , 162 , 160 , or 17 ( attach Form ( s ) 547 1 ) ( see instructions ) .\\ LL Global Intangible Low - Taxed Income ( GILT I ) ( attach Form ( s ) 5471 and Form 89.92 ) . 18 Gross - up for foreign taxes deemed paid\\ 79 IC - DISC and former DISC dividends not included on line 1 , 2 , or 3\\ 20 Other dividends 27 Deduction for dividends paid on certain preferred stock of public utilities* 22 Section 250 deduction ( attach Form 89.93 )\\ 23 Total dividends and inclusions . Add lines 9 through 20 . Enter here and on page 1 , line 4\\ 24 Total special deductions . Add lines 9 through 22 , column ( C ) . Enter here and on page 1 , line 296