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.

1. 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.

2. 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

3. 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.

4. 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.

5. 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.

6. 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

7. 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

8. $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):

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. Total Expenses:
$ 1,823,250
Federal income tax expense
0
Net Income: ($59,250)