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Can someone please help with this ASAP!! Tax return problem 7




Instructions;Please complete the required federal corporation income tax return forms for Express Catering, Inc. for the 2013 tax year based upon the facts presented 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.;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;Express Catering, Inc.;257 West 55 th Avenue;New York City, NY 10027;EIN- 13-9825934;Date Incorporated: March 17, 2008;EC has been at the same address and has not changed its name since inception.;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;Raphael Giordano;160 West 57 th Avenue;New York City, NY 10027;SSN: 356-87-4322;Shares owned 5,500;Silvia Giordano Costa;250 South Main;Hoboken, New Jersey 07030;SSN: 284-58-4583;Shares owned 1,500;Andrea Giordano;65 East 55 th Avenue;New York City, NY 10027;SSN: 423-84-2343;Shares owned 1,500;Marco Giordano;160 West 57 th Avenue;New York City, NY 10027;SSN-487-27-4797;Shares owned 1,500;EC uses the accrual method of accounting and follows GAAP. EC is not a subsidiary nor is it in an affiliated group with any other entity. EC is not audited by a CPA firm and has never had a restatement of its income statement.;EC reported the following information for the year;? 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.;Additional information;EC has been expanding rapidly 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.;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.;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, 2010 for $100,000 (no premium or discount paid). The bond was redeemed by New York City on February 1, 2013 for $100,000. EC received a Form 1099-B to reflect the transaction. Box 6b of the 1099-B was checked.;EC purchased 200 shares of Apple, Inc. on October 10, 2010 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). EC received a 1099-B reporting the sale proceeds. Box 6b was checked on the Form 1099-B.;During the year EC contributed $8,000 to the American Lung Association.;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, 2014.;EC prepaid an insurance premium of $21,000 in September. The new policy is effective October 1, 2013 through September 30, 2014;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. EC wants to claim the fastest recovery method(s) possible on these asset additions without electing any ?179 expensing.;Total current year asset additions are as follows (all the equipment purchased was new);Description;Date Purchased;Amount;5 Year MACRS Property;October 2, 2013;$480,000;7 year MACRS Property;September 10, 2013;$320,000;Delivery Truck (over 6,000 lbs):5 Year MACRS Property;October 12, 2013;$40,000;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 time devoted to business;Percent of stock owned;Amount of compensation;130,000;356-87-4322;100%;55%;150,000;Silvia Costa;284-58-4583;100%;15%;130,000;Andrea Giordano;423-84-2343;100%;15%;130,000;Marco Giordano;487-27-4797;100%;15%;120,000;As reported on the balance sheet (see below), on December 31, 2012 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 2013. Also as reported on the balance sheet, on December 31, 2013, the accrued wages were $51,500. The wages were owed to Raphael, Silvia, Andrea, and Marco. The accrued wages were paid on January 22, 2014.;All of the other employees? wages and bonuses were paid on December 31, 2013.;As of December 31, 2012 and December 31, 2013, respectively, EC had accrued vacation payable on its books of $62,500 and $73,000. All of the 2012 vacation accrual was paid during the period from April 1 through November 30, 2013. As of March 15, 2014 EC had paid none of its 2013 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, 2012 or 2013.;On November 1, a large insurance company paid EC a $100,000 deposit to reserve catering event services on March 18, 2014 at the insurance company?s annual meeting in New York City. The money is fully refundable up until January 15, 2014. Thereafter, half of the deposit becomes non-refundable.;EC maintains an inventory of several items. Inventory is valued at cost. EC has never has never changed it inventory method. EC uses specific identification for its inventory. EC has never written down any subnormal goods. The rules of Section 263A (UNICAP) do not apply to EC.;EC did not pay a dividend in the current year.;EC made no estimated tax payments during the current year.;Financial Statements (kept on a GAAP basis);Express Catering, Inc.;Balance Sheet;Assets: 1/01/2013 12/31/2013;Cash$ 62,500$ 44,000;Accounts Receivable 145,000 177,000;Less: Allowance for Bad Debts (32,000) (41,000);Inventory 59,000 96,000;Publicly traded securities 100,000 0;Tax-exempt bond 100,000 0;U.S. Treasury Bonds 125,000 125,000;Fixed Assets 2,115,000 2,955,000;Less: Acc. Depreciation (436,500) (715,000);Prepaid Insurance 0 15,750;Prepaid Rent 38,500 39,500;Prepaid Advertising 0 27,500;Total Assets: $2,276,500$2,723,750;Liabilities and Shareholders? Equity;Accounts Payable 102,000 131,000;Accrued Bonuses 45,000 0;Accrued Vacation 62,500 73,000;Accrued Wages 44,500 51,500;Event Deposits 0 100,000;Note Payable-First Bank of NY (Credit Line) 424,000 657,000;Note Payable-EG Capital Equipment Leasing 1,243,000 1,415,000;Capital Stock 1,000 1,000;Additional paid-in Capital 99,000 99,000;Retained Earnings-Unappropriated 255,500 196,250;Total Liabilities and Shareholders? Equity: $2,276,500 $2,723,750;Income Statement for the period ending December 31, 2013;Item Amount;Income;Gross Sales $ 2,925,000;Less: Returns (8,500);Net Sales 2,916,500;Cost of Goods Sold (1,129,850);Gross Profit 1,786,650;Dividend Income 2,800;Interest Income -Bank 150;Interest Income-U.S. Treasury 3,000;Municipal Bond Interest Income 1,400;Capital Loss-Apple, Inc. (30,000);Total Income: 1,764,000;Expenses;Employee Salaries 743,500;Repairs and Maintenance 19,000;Bad Debts 44,000;Rent 230,000;Payroll Taxes 60,000;Licensing Fees 4,500;Property Taxes 12,500;Interest Expense 140,000;Depreciation 278,500;Office Supplies 5,400;Employee Training 3,600;Employee Benefits 24,000;Charitable Contribution 8,000;Advertising 70,000;Meals and Entertainment 3,400;Travel 600;Insurance 19,750;Utilities 142,000;Telephone 14,500;Total Expenses: $ 1,823,250;Federal income tax expense 0;Net Income: ($59,250)


Paper#74462 | Written in 18-Jul-2015

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