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Tax return-problem

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Instructions: Please complete the Express Catering, Inc.’s 2014 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. 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 55th Avenue New York City, NY 10027 EIN- 13-9823459 Date Incorporated: March 17, 2009 EC’s address has not changed since its 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 57th 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 55th Avenue New York City, NY 10027 SSN: 423-84-2343 Shares owned 1,500 Marco Giordano 160 West 57th 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 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. 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, 2011 for $100,000 (no premium or discount paid). The bond was redeemed by New York City on February 1, 2014 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, 2011 for $100,000 (including commission). On July 10, of the current year, E

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