Weighted average. Owned 0 on January 1, bought 50% from James on May Norma Shipper Owned all year 100

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1 Case Study Corntax Inc Using 2017 Forms adapted for 2017 tax laws.., had three shareholders in 2018 Weighted average James Robertson Owned 50% on January 1, sold to John on May John Bouchet Owned 0 on January 1, bought 50% from James on May Norma Shipper Owned all year 100 All operations were domestic manufacturing. Income statement for 2018 Book Tax Sales 35,084,054 35,084,054 COGS 23,857,157 23,857,157 Gross Margin 11,226,897 11,226,897 Officer compensation 264, ,000 Other compensation 1,487,357 1,487,357 Repair & Maintenance 1,985,950 1,985,950 Bad debts 108, ,832 Payroll taxes 775, ,175 Property Taxes 375, ,000 Licenses 9,875 9,875 Depreciation 722, ,810 advertising 694, ,350 pension 295, ,389 benefits 94,768 94,768 Other 2,135,479 2,135,479 Total Exp 8,948,160 9,069,985 Interest on receivables 35,084 35,084 Investment interest 43,767 43,767 Gain on sale of depreciated asset 12,750 24,750 Dividend income 27,945 27,945 Interest paid 2,103, ,421 Income before tax 295,156 1,426,491 State IT 701, ,681 After state it (406,525) 724,810 Other items. Page 1

2 1. Interest allowed for 163(j) Business interest income, financing customers 35,084 adjusted taxable income: ordinary income before interest 2,317,791 30% 695,337 Limit 730,421 to Page 1 Interest paid 2,103,127 Deduction 730,421 Carried forward 1,372,706 to Schedule M-1 2. Total compensation reported on Form W-2 $3,200,000, includes amounts on 1125A A Income Qualified business income Page 1 Income $749,560 Business interest income 35,084 Total $784,644 W-2 wage 3,200,000 Qualified property 28,355, Allocations Based on per-share, per-day Norma James John Total Percent owned Percent year Weighted average A Income $392,322 $156,929 $235, ,644 W-2 wage 1,600, , ,000 3,200,000 Qualified property 14,177,716 8,506,630 5,671,086 5,671,086 8,506, ,355,432 Page 2

3 Norma 17ZV 199A Income $392,322 17AAW W-2 wage 1,600,000 17ABX Qualified property 14,177,716 James 17VZ 199A Income $156,929 17WAA W-2 wage 640,000 17XAB Qualified 8,506,630 property 5,671,086 John 17VZ 199A Income $235,393 17AAW W-2 wage 960,000 17XAB Qualified 5,671,086 property 8,506,630 Page 3

4 Form 1120S U.S. Income Tax Return for an S Corporation Do not file this form unless the corporation has filed or is attaching Form 2553 to elect to be an S corporation. Go to for instructions and the latest information. Department of the Treasury Internal Revenue Service For calendar year 2017 or tax year beginning, 2017, ending, 20 A S election effective date 01/10/2003 B Business activity code number (see instructions) TYPE OR PRINT Name Number, street, and room or suite no. If a P.O. box, see instructions. City or town, state or province, country, and ZIP or foreign postal code OMB No D Employer identification number E Date incorporated F Total assets (see instructions) C Check if Sch. M-3 attached $ G Is the corporation electing to be an S corporation beginning with this tax year? Yes No If Yes, attach Form 2553 if not already filed H Check if: (1) Final return (2) Name change (3) Address change (4) Amended return (5) S election termination or revocation I Enter the number of shareholders who were shareholders during any part of the tax year Caution: Include only trade or business income and expenses on lines 1a through 21. See the instructions for more information. Income Deductions (see instructions for limitations) Tax and Payments 1 a Gross receipts or sales a 35,084,054. b Returns and allowances b c Balance. Subtract line 1b from line 1a c 2 Cost of goods sold (attach Form 1125-A) Gross profit. Subtract line 2 from line 1c Net gain (loss) from Form 4797, line 17 (attach Form 4797) Other income (loss) (see instructions attach statement) Total income (loss). Add lines 3 through Compensation of officers (see instructions attach Form 1125-E) Salaries and wages (less employment credits) Repairs and maintenance Bad debts Rents Taxes and licenses Interest Depreciation not claimed on Form 1125-A or elsewhere on return (attach Form 4562) Depletion (Do not deduct oil and gas depletion.) Advertising Pension, profit-sharing, etc., plans Employee benefit programs Other deductions (attach statement) See.. Statement Total deductions. Add lines 7 through Ordinary business income (loss). Subtract line 20 from line a Excess net passive income or LIFO recapture tax (see instructions).. 22a b Tax from Schedule D (Form 1120S) b c Add lines 22a and 22b (see instructions for additional taxes) c 23 a 2017 estimated tax payments and 2016 overpayment credited to a b Tax deposited with Form b c Credit for federal tax paid on fuels (attach Form 4136) c d Add lines 23a through 23c d 24 Estimated tax penalty (see instructions). Check if Form 2220 is attached Amount owed. If line 23d is smaller than the total of lines 22c and 24, enter amount owed Overpayment. If line 23d is larger than the total of lines 22c and 24, enter amount overpaid Enter amount from line 26 Credited to 2018 estimated tax Refunded 27 Sign Here Paid Preparer Use Only 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, 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 with the preparer shown below (see instructions)? Signature of officer Date Title Yes No Print/Type preparer's name Preparer's signature Date PTIN Check if self-employed 415 Warren St Ithaca NY Firm's name Firm's EIN Firm's address Phone no. For Paperwork Reduction Act Notice, see separate instructions. REV 12/26/17 TTBIZ Form 1120S (2017) BAA /10/ ,463, ,084, ,857, ,226, , ,251, ,000. 1,487,357. 1,985, ,832. 1,861, , , , , ,768. 2,135, ,502, ,560. Page 4

5 Form 1120S (2017) Page 2 Schedule B Other Information (see instructions) 1 Check accounting method: a Cash b Accrual Yes No c Other (specify) 2 See the instructions and enter the: a Business activity Manufacturing b Product or service Equipment 3 At any time during the tax year, was any shareholder of the corporation a disregarded entity, a trust, an estate, or a nominee or similar person? If "Yes," attach Schedule B-1, Information on Certain Shareholders of an S Corporation.. 4 At the end of the tax year, did the corporation: a Own directly 20% or more, or own, directly or indirectly, 50% or more of the total stock issued and outstanding of any foreign or domestic corporation? For rules of constructive ownership, see instructions. If Yes, complete (i) through (v) below (i) Name of Corporation (ii) Employer Identification Number (if any) (iii) Country of Incorporation (iv) Percentage of Stock Owned (v) If Percentage in (iv) is 100%, Enter the Date (if any) a Qualified Subchapter S Subsidiary Election Was Made b Own directly an interest of 20% or more, or own, directly or indirectly, an interest of 50% or more in the profit, loss, or capital in any foreign or domestic partnership (including an entity treated as a partnership) or in the beneficial interest of a trust? For rules of constructive ownership, see instructions. If Yes, complete (i) through (v) below (i) Name of Entity (ii) Employer Identification Number (if any) (iii) Type of Entity (iv) Country of Organization (v) Maximum Percentage Owned in Profit, Loss, or Capital 5a At the end of the tax year, did the corporation have any outstanding shares of restricted stock? If Yes, complete lines (i) and (ii) below. (i) Total shares of restricted stock (ii) Total shares of non-restricted stock b At the end of the tax year, did the corporation have any outstanding stock options, warrants, or similar instruments?. If Yes, complete lines (i) and (ii) below. (i) Total shares of stock outstanding at the end of the tax year (ii) Total shares of stock outstanding if all instruments were executed 6 Has this corporation filed, or is it required to file, Form 8918, Material Advisor Disclosure Statement, to provide information on any reportable transaction? Check this box if the corporation issued publicly offered debt instruments with original issue discount.... If checked, the corporation may have to file Form 8281, Information Return for Publicly Offered Original Issue Discount Instruments. 8 If the corporation: (a) was a C corporation before it elected to be an S corporation or the corporation acquired an asset with a basis determined by reference to the basis of the asset (or the basis of any other property) in the hands of a C corporation and (b) has net unrealized built-in gain in excess of the net recognized built-in gain from prior years, enter the net unrealized built-in gain reduced by net recognized built-in gain from prior years (see instructions) $ 9 Enter the accumulated earnings and profits of the corporation at the end of the tax year. $ 10 Does the corporation satisfy both of the following conditions? a The corporation s total receipts (see instructions) for the tax year were less than $250, b The corporation s total assets at the end of the tax year were less than $250, If Yes, the corporation is not required to complete Schedules L and M During the tax year, did the corporation have any non-shareholder debt that was canceled, was forgiven, or had the terms modified so as to reduce the principal amount of the debt? If Yes, enter the amount of principal reduction $ 12 During the tax year, was a qualified subchapter S subsidiary election terminated or revoked? If Yes, see instructions. 13 a Did the corporation make any payments in 2017 that would require it to file Form(s) 1099? b If Yes, did the corporation file or will it file required Forms 1099? REV 12/26/17 TTBIZ Form 1120S (2017) Page 5

6 Form 1120S (2017) Page 3 Schedule K Shareholders Pro Rata Share Items Total amount 1 Ordinary business income (loss) (page 1, line 21) , Net rental real estate income (loss) (attach Form 8825) a Other gross rental income (loss) a b Expenses from other rental activities (attach statement).. 3b c Other net rental income (loss). Subtract line 3b from line 3a c 4 Interest income , Dividends: a Ordinary dividends a 27,945. b Qualified dividends b 6 Royalties Net short-term capital gain (loss) (attach Schedule D (Form 1120S)) a Net long-term capital gain (loss) (attach Schedule D (Form 1120S)) a b Collectibles (28%) gain (loss) b c Unrecaptured section 1250 gain (attach statement).... 8c 9 Net section 1231 gain (loss) (attach Form 4797) Other income (loss) (see instructions).. Type Section 179 deduction (attach Form 4562) a Charitable contributions a b Investment interest expense b c Section 59(e)(2) expenditures (1) Type (2) Amount 12c(2) d Other deductions (see instructions)... Type 12d 13a Low-income housing credit (section 42(j)(5)) a b Low-income housing credit (other) b c Qualified rehabilitation expenditures (rental real estate) (attach Form 3468, if applicable).. 13c d Other rental real estate credits (see instructions) Type 13d e Other rental credits (see instructions)... Type 13e f Biofuel producer credit (attach Form 6478) f g Other credits (see instructions)..... Type 13g 14a Name of country or U.S. possession Income (Loss) Deductions Credits Foreign Transactions Alternative Minimum Tax (AMT) Items Items Affecting Shareholder Basis b Gross income from all sources b c Gross income sourced at shareholder level c Foreign gross income sourced at corporate level d Passive category d e General category e f Other (attach statement) f Deductions allocated and apportioned at shareholder level g Interest expense g h Other h Deductions allocated and apportioned at corporate level to foreign source income i Passive category i j General category j k Other (attach statement) k Other information l Total foreign taxes (check one): Paid Accrued l m Reduction in taxes available for credit (attach statement) m n Other foreign tax information (attach statement) 15 a Post-1986 depreciation adjustment a b Adjusted gain or loss b c Depletion (other than oil and gas) c d Oil, gas, and geothermal properties gross income d e Oil, gas, and geothermal properties deductions e f Other AMT items (attach statement) f 16 a Tax-exempt interest income a b Other tax-exempt income b c Nondeductible expenses c d Distributions (attach statement if required) (see instructions) d e Repayment of loans from shareholders e REV 12/26/17 TTBIZ Page 6 300,000. Form 1120S (2017)

7 Form 1120S (2017) Page 4 Schedule K Shareholders Pro Rata Share Items (continued) Total amount 17a Investment income a 106,796. b Investment expenses b c Dividend distributions paid from accumulated earnings and profits c 0. d Other items and amounts (attach statement) Other Information Reconciliation 18 Income/loss reconciliation. Combine the amounts on lines 1 through 10 in the far right column. From the result, subtract the sum of the amounts on lines 11 through 12d and 14l 18 Schedule L Balance Sheets per Books Beginning of tax year End of tax year 856,356. Assets (a) (b) (c) (d) 1 Cash , ,100. 2a Trade notes and accounts receivable... 2,506,004. 2,631,304. b Less allowance for bad debts ( 125,300. ) 2,380,704. ( 131,565. ) 2,499, Inventories ,475,629. 1,770, U.S. government obligations Tax-exempt securities (see instructions).. 6 Other current assets (attach statement) , , Loans to shareholders Mortgage and real estate loans Other investments (attach statement) , , a Buildings and other depreciable assets... 26,750, ,355,432. b Less accumulated depreciation..... ( 12,037,694. ) 14,712,738. ( 12,759,944. ) 15,595, a Depletable assets b Less accumulated depletion ( ) ( ) 12 Land (net of any amortization) ,150,844. 2,150, a Intangible assets (amortizable only).... b Less accumulated amortization..... ( ) ( ) 14 Other assets (attach statement) Total assets ,984, ,463,068. Liabilities and Shareholders Equity 16 Accounts payable ,428,422. 1,745, Mortgages, notes, bonds payable in less than 1 year 4,012,565. 4,772, Other current liabilities (attach statement).. 19 Loans from shareholders Mortgages, notes, bonds payable in 1 year or more 13,910, ,019, Other liabilities (attach statement) Capital stock ,000,000. 2,000, Additional paid-in capital Retained earnings , , Adjustments to shareholders equity (attach statement) 26 Less cost of treasury stock ( ) ( ) 27 Total liabilities and shareholders equity.. 21,984, ,463,068. REV 12/26/17 TTBIZ Form 1120S (2017) Page 7

8 Form 1120S (2017) Page 5 Schedule M-1 Reconciliation of Income (Loss) per Books With Income (Loss) per Return Note: The corporation may be required to file Schedule M-3 (see instructions) 1 Net income (loss) per books , Income recorded on books this year not included 2 Income included on Schedule K, lines 1, 2, 3c, 4, on Schedule K, lines 1 through 10 (itemize): 5a, 6, 7, 8a, 9, and 10, not recorded on books this a Tax-exempt interest $ year (itemize) Gain on sale of business asset 12, , Expenses recorded on books this year not included on Schedule K, lines 1 through 12 and 14l (itemize): 6 Deductions included on Schedule K, lines 1 through 12 and 14l, not charged against book income this year (itemize): a Depreciation $ 722,250. a Depreciation $ 837,810. b Travel and entertainment $ Bad debts 114, ,642. See M-1, Line 3 Stmt 1,481,273. 2,203, Add lines 5 and , Add lines 1 through ,808, Income (loss) (Schedule K, line 18). Line 4 less line 7 856,356. Schedule M-2 Analysis of Accumulated Adjustments Account, Other Adjustments Account, and Shareholders Undistributed Taxable Income Previously Taxed (see instructions) 1 Balance at beginning of tax year Ordinary income from page 1, line Other additions See.. M-2.. Line Stmt.. 4 Loss from page 1, line Other reductions Combine lines 1 through Distributions other than dividend distributions 8 Balance at end of tax year. Subtract line 7 from line 6 (a) Accumulated adjustments account (b) Other adjustments account (c) Shareholders undistributed taxable income previously taxed 487, , ,796. ( ) ( ) ( ) 1,343, , ,043, Form 1120S (2017) REV 12/26/17 TTBIZ Page 8

9 Form 1125-A (Rev. October 2016) Department of the Treasury Internal Revenue Service Name Cost of Goods Sold Attach to Form 1120, 1120-C, 1120-F, 1120S, 1065, or 1065-B. Information about Form 1125-A and its instructions is at 1 Inventory at beginning of year Purchases Cost of labor Additional section 263A costs (attach schedule). Officer.... Compensation Other costs (attach schedule) Total. Add lines 1 through Inventory at end of year OMB No Employer identification number 8 Cost of goods sold. Subtract line 7 from line 6. Enter here and on Form 1120, page 1, line 2 or the appropriate line of your tax return. See instructions ,857,157 9a Check all methods used for valuing closing inventory: (i) Cost (ii) Lower of cost or market (iii) Other (Specify method used and attach explanation.) b Check if there was a writedown of subnormal goods c Check if the LIFO inventory method was adopted this tax year for any goods (if checked, attach Form 970) d If the LIFO inventory method was used for this tax year, enter amount of closing inventory computed under LIFO d 1,770,755 e If property is produced or acquired for resale, do the rules of section 263A apply to the entity? See instructions.. Yes No f ,475,629 16,231,919 3,246, ,000 4,057,980 25,627,912 1,770,755 Was there any change in determining quantities, cost, or valuations between opening and closing inventory? If Yes, attach explanation Yes No Section references are to the Internal Revenue Code unless otherwise noted. General Instructions Purpose of Form Use Form 1125-A to calculate and deduct cost of goods sold for certain entities. Who Must File Filers of Form 1120, 1120-C, 1120-F, 1120S, 1065, or 1065-B, must complete and attach Form 1125-A if the applicable entity reports a deduction for cost of goods sold. Inventories Generally, inventories are required at the beginning and end of each tax year if the production, purchase, or sale of merchandise is an income-producing factor. See Regulations section If inventories are required, you generally must use an accrual method of accounting for sales and purchases of inventory items. Exception for certain taxpayers. If you are a qualifying taxpayer or a qualifying small business taxpayer (defined below), you can adopt or change your accounting method to account for inventoriable items in the same manner as materials and supplies that are not incidental. Under this accounting method, inventory costs for raw materials purchased for use in producing finished goods and merchandise purchased for resale are deductible in the year the finished goods or merchandise are sold (but not before the year you paid for the raw materials or merchandise, if you are also using the cash method). If you account for inventoriable items in the same manner as materials and supplies that are not incidental, you can currently deduct expenditures for direct labor and all indirect costs that would otherwise be included in inventory costs. See the instructions for lines 2 and 7. For additional guidance on this method of accounting, see Pub. 538, Accounting Periods and Methods. For guidance on adopting or changing to this method of accounting, see Form 3115, Application for Change in Accounting Method, and its instructions. Qualifying taxpayer. A qualifying taxpayer is a taxpayer that, (a) for each prior tax year ending after December 16, 1998, has average annual gross receipts of $1 million or less for the 3 prior tax years, and (b) its business is not a tax shelter (as defined in section 448(d)(3)). See Rev. Proc , I.R.B Qualifying small business taxpayer. A qualifying small business taxpayer is a taxpayer that, (a) for each prior tax year ending on or after December 31, 2000, has average annual gross receipts of $10 million or less for the 3 prior tax years, (b) whose principal business activity is not an ineligible activity, and (c) whose business is not a tax shelter (as defined in section 448 (d)(3)). See Rev. Proc , I.R.B Uniform capitalization rules. The uniform capitalization rules of section 263A generally require you to capitalize, or include in inventory, certain costs incurred in connection with the following. The production of real property and tangible personal property held in inventory or held for sale in the ordinary course of business. Real property or personal property (tangible and intangible) acquired for resale. The production of real property and tangible personal property by a corporation for use in its trade or business or in an activity engaged in for profit. See the discussion on section 263A uniform capitalization rules in the instructions for your tax return before completing Form 1125-A. Also see Regulations sections 1.263A-1 through 1.263A-3. See Regulations section 1.263A-4 for rules for property produced in a farming business. For Paperwork Reduction Act Notice, see instructions. BAA REV 11/13/17 TTBIZ Form 1125-A (Rev ) Page 9

10 Schedule K-1 (Form 1120S) 2017 Page 2 This list identifies the codes used on Schedule K-1 for all shareholders and provides summarized reporting information for shareholders who file Form For detailed reporting and filing information, see the separate Shareholder s Instructions for Schedule K-1 and the instructions for your income tax return. 1. Ordinary business income (loss). Determine whether the income (loss) is passive or nonpassive and enter on your return as follows: Report on Passive loss Passive income Schedule E, line 28, column (g) Nonpassive loss Nonpassive income Schedule E, line 28, column (j) 2. Net rental real estate income (loss) 3. Other net rental income (loss) Net income Schedule E, line 28, column (g) Net loss 4. Interest income Form 1040, line 8a 5a. Ordinary dividends Form 1040, line 9a 5b. Qualified dividends Form 1040, line 9b 6. Royalties Schedule E, line 4 7. Net short-term capital gain (loss) Schedule D, line 5 8a. Net long-term capital gain (loss) Schedule D, line 12 8b. Collectibles (28%) gain (loss) 28% Rate Gain Worksheet, line 4 (Schedule D instructions) 8c. Unrecaptured section 1250 gain 9. Net section 1231 gain (loss) 10. Other income (loss) Code A Other portfolio income (loss) B Involuntary conversions C Sec contracts & straddles Form 6781, line 1 D Mining exploration costs recapture See Pub. 535 E Other income (loss) 11. Section 179 deduction 12. Other deductions A Cash contributions (50%) B Cash contributions (30%) C Noncash contributions (50%) D Noncash contributions (30%) E Capital gain property to a 50% organization (30%) F Capital gain property (20%) G Contributions (100%) H Investment interest expense Form 4952, line 1 I Deductions royalty income Schedule E, line 19 J Section 59(e)(2) expenditures K Deductions portfolio (2% floor) Schedule A, line 23 L Deductions portfolio (other) Schedule A, line 28 M Preproductive period expenses N Commercial revitalization deduction from rental real estate activities See Form 8582 instructions O Reforestation expense deduction P Domestic production activities information See Form 8903 instructions Q Qualified production activities income Form 8903, line 7b R Employer s Form W-2 wages Form 8903, line 17 S Other deductions 13. Credits A Low-income housing credit (section 42(j)(5)) from pre-2008 buildings B Low-income housing credit (other) from pre-2008 buildings C Low-income housing credit (section 42(j)(5)) from post-2007 buildings D Low-income housing credit (other) from post-2007 buildings E Qualified rehabilitation expenditures (rental real estate) F Other rental real estate credits G Other rental credits H Undistributed capital gains credit I Biofuel producer credit J Work opportunity credit K Disabled access credit L Empowerment zone employment credit M Credit for increasing research activities See Code Report on N Credit for employer social security and Medicare taxes O Backup withholding P Other credits 14. Foreign transactions A Name of country or U.S. possession B Gross income from all sources C Gross income sourced at shareholder level Foreign gross income sourced at corporate level D Passive category E General category F Other Form 1116, Part I Form 1116, Part I Deductions allocated and apportioned at shareholder level G Interest expense Form 1116, Part I H Other Form 1116, Part I Deductions allocated and apportioned at corporate level to foreign source income I Passive category J General category Form 1116, Part I K Other Other information L Total foreign taxes paid Form 1116, Part II M Total foreign taxes accrued Form 1116, Part II N Reduction in taxes available for credit Form 1116, line 12 O Foreign trading gross receipts Form 8873 P Extraterritorial income exclusion Form 8873 Q Other foreign transactions 15. Alternative minimum tax (AMT) items A Post-1986 depreciation adjustment B Adjusted gain or loss C Depletion (other than oil & gas) D Oil, gas, & geothermal gross income and the Instructions for Form 6251 E Oil, gas, & geothermal deductions F Other AMT items 16. Items affecting shareholder basis A Tax-exempt interest income Form 1040, line 8b B Other tax-exempt income C Nondeductible expenses D Distributions E Repayment of loans from shareholders 17. Other information A Investment income Form 4952, line 4a B Investment expenses Form 4952, line 5 C Qualified rehabilitation expenditures (other than rental real estate) D Basis of energy property E Recapture of low-income housing credit (section 42(j)(5)) Form 8611, line 8 F Recapture of low-income housing credit (other) Form 8611, line 8 G Recapture of investment credit See Form 4255 H Recapture of other credits I Look-back interest completed long-term contracts See Form 8697 J Look-back interest income See the Shareholder s forecast method See Form 8866 Instructions K Dispositions of property with section 179 deductions L Recapture of section 179 deduction M Section 453(l)(3) information N Section 453A(c) information Form 1040, line 73, box a O Section 1260(b) information P Interest allocable to production expenditures Q CCF nonqualified withdrawals the Shareholder s Instructions R Depletion information oil and gas S Reserved T Section 108(i) information U Net investment income V Other information REV 12/13/17 TTBIZ From Draft 2018 form 1065 Page 10

11 Schedule K-1 (Form 1120S) 2017 Department of the Treasury Internal Revenue Service For calendar year 2017, or tax year beginning / / 2017 ending / / Shareholder s Share of Income, Deductions, Credits, etc. See back of form and separate instructions. A B Part I Information About the Corporation Corporation s employer identification number Corporation s name, address, city, state, and ZIP code 415 Warren St Ithaca, NY Final K-1 Amended K-1 OMB No Part III Shareholder s Share of Current Year Income, Deductions, Credits, and Other Items 1 Ordinary business income (loss) 13 Credits 2 Net rental real estate income (loss) 3 Other net rental income (loss) 4 Interest income 5a Ordinary dividends 5b Qualified dividends 6 Royalties 374, , , Net short-term capital gain (loss) 14 Foreign transactions C IRS Center where corporation filed return Ogden, UT Part II Information About the Shareholder D Shareholder s identifying number 8a Net long-term capital gain (loss) 8b Collectibles (28%) gain (loss) 8c Unrecaptured section 1250 gain E Shareholder s name, address, city, state, and ZIP code Norma Shipper 9 Net section 1231 gain (loss) 10 Other income (loss) 15 Alternative minimum tax (AMT) items F Shareholder s percentage of stock ownership for tax year % 11 Section 179 deduction 12 Other deductions 16 Items affecting shareholder basis D 150,000. For IRS Use Only 17 Other information A 53,398. * See attached statement for additional information. For Paperwork Reduction Act Notice, see the Instructions for Form 1120S. Schedule K-1 (Form 1120S) 2017 REV 12/13/17 TTBIZ BAA Page 11

12 Schedule K-1 (Form 1120S) 2017 Department of the Treasury Internal Revenue Service For calendar year 2017, or tax year beginning / / 2017 ending / / Shareholder s Share of Income, Deductions, Credits, etc. See back of form and separate instructions. A B Part I Information About the Corporation Corporation s employer identification number Corporation s name, address, city, state, and ZIP code 415 Warren St Ithaca, NY Final K-1 Amended K-1 OMB No Part III Shareholder s Share of Current Year Income, Deductions, Credits, and Other Items 1 Ordinary business income (loss) 13 Credits 2 Net rental real estate income (loss) 3 Other net rental income (loss) 4 Interest income 5a Ordinary dividends 5b Qualified dividends 6 Royalties 149, ,770. 5, Net short-term capital gain (loss) 14 Foreign transactions C IRS Center where corporation filed return Ogden, UT Part II Information About the Shareholder D Shareholder s identifying number 8a Net long-term capital gain (loss) 8b Collectibles (28%) gain (loss) 8c Unrecaptured section 1250 gain E Shareholder s name, address, city, state, and ZIP code James Robertson 9 Net section 1231 gain (loss) 10 Other income (loss) 15 Alternative minimum tax (AMT) items F Shareholder s percentage of stock ownership for tax year % 11 Section 179 deduction 12 Other deductions 16 Items affecting shareholder basis D 60,000. For IRS Use Only 17 Other information A 21,359. * See attached statement for additional information. For Paperwork Reduction Act Notice, see the Instructions for Form 1120S. Schedule K-1 (Form 1120S) 2017 REV 12/13/17 TTBIZ BAA Page 12

13 Schedule K-1 (Form 1120S) 2017 Department of the Treasury Internal Revenue Service For calendar year 2017, or tax year beginning / / 2017 ending / / Shareholder s Share of Income, Deductions, Credits, etc. See back of form and separate instructions. A B Part I Information About the Corporation Corporation s employer identification number Corporation s name, address, city, state, and ZIP code 415 Warren St Ithaca, NY Final K-1 Amended K-1 OMB No Part III Shareholder s Share of Current Year Income, Deductions, Credits, and Other Items 1 Ordinary business income (loss) 13 Credits 2 Net rental real estate income (loss) 3 Other net rental income (loss) 4 Interest income 5a Ordinary dividends 5b Qualified dividends 6 Royalties 224, ,655. 8, Net short-term capital gain (loss) 14 Foreign transactions C IRS Center where corporation filed return Ogden, UT Part II Information About the Shareholder D Shareholder s identifying number 8a Net long-term capital gain (loss) 8b Collectibles (28%) gain (loss) 8c Unrecaptured section 1250 gain E Shareholder s name, address, city, state, and ZIP code John Bouchet 9 Net section 1231 gain (loss) 10 Other income (loss) 15 Alternative minimum tax (AMT) items F Shareholder s percentage of stock ownership for tax year % 11 Section 179 deduction 12 Other deductions 16 Items affecting shareholder basis D 90,000. For IRS Use Only 17 Other information A 32,039. * See attached statement for additional information. For Paperwork Reduction Act Notice, see the Instructions for Form 1120S. Schedule K-1 (Form 1120S) 2017 REV 12/13/17 TTBIZ BAA Page 13

14 Schedule K-1 (Form 1120S) 2018 Page 2 This list identifies the codes used on Schedule K-1 for all shareholders and provides summarized reporting information for shareholders who file Form For detailed reporting and filing information, see the separate Shareholder s Instructions for Schedule K-1 and the instructions for your income tax return. 1. Ordinary business income (loss). Determine whether the income (loss) is passive or nonpassive and enter on your return as follows: Report on Passive loss Passive income Schedule E, line 28, column (h) Nonpassive loss Nonpassive income Schedule E, line 28, column (k) 2. Net rental real estate income (loss) 3. Other net rental income (loss) Net income Schedule E, line 28, column (h) Net loss DRAFT AS OF August 20, 2018 DO NOT FILE 4. Interest income Form 1040, line 2b 5a. Ordinary dividends Form 1040, line 3b 5b. Qualified dividends Form 1040, line 3a 6. Royalties Schedule E, line 4 7. Net short-term capital gain (loss) Schedule D, line 5 8a. Net long-term capital gain (loss) Schedule D, line 12 8b. Collectibles (28%) gain (loss) 28% Rate Gain Worksheet, line 4 (Schedule D instructions) 8c. Unrecaptured section 1250 gain 9. Net section 1231 gain (loss) 10. Other income (loss) Code A Other portfolio income (loss) B Involuntary conversions C Sec contracts & straddles Form 6781, line 1 D Mining exploration costs recapture See Pub. 535 E Section 951A income F Section 965(a) inclusion G Subpart F income other than sections 951A and 965 inclusion H Other income (loss) 11. Section 179 deduction 12. Other deductions A Cash contributions (60%) B Cash contributions (30%) C Noncash contributions (50%) D Noncash contributions (30%) E Capital gain property to a 50% organization (30%) F Capital gain property (20%) G Contributions (100%) H Investment interest expense Form 4952, line 1 I Deductions royalty income Schedule E, line 19 J Section 59(e)(2) expenditures K Section 965(c) deduction L Deductions portfolio (other) Schedule A, line 16 M Preproductive period expenses N Commercial revitalization deduction from rental real estate activities See Form 8582 instructions O Reforestation expense deduction P through R Reserved for future use S Other deductions 13. Credits A Low-income housing credit (section 42(j)(5)) from pre-2008 buildings B Low-income housing credit (other) from pre-2008 buildings C Low-income housing credit (section 42(j)(5)) from post-2007 buildings See the Shareholder s D Low-income housing credit (other) Instructions from post-2007 buildings E Qualified rehabilitation expenditures (rental real estate) F Other rental real estate credits G Other rental credits H Undistributed capital gains credit Schedule 5 (Form 1040), line 74, box a I Biofuel producer credit J Work opportunity credit K Disabled access credit L Empowerment zone employment credit See the Shareholder s M Credit for increasing research Instructions activities N Credit for employer social security and Medicare taxes Page 14 Code O Backup withholding P Other credits 14. Foreign transactions A Name of country or U.S. possession B Gross income from all sources C Gross income sourced at Report on Form 1116, Part I shareholder level Foreign gross income sourced at corporate level D Section 951A category E Foreign branch category F Passive category Form 1116, Part I G General category H Other Deductions allocated and apportioned at shareholder level I Interest expense Form 1116, Part I J Other Form 1116, Part I Deductions allocated and apportioned at corporate level to foreign source income K Section 951A category L Foreign branch category M Passive category Form 1116, Part I N General category O Other Other information P Total foreign taxes paid Form 1116, Part II Q Total foreign taxes accrued Form 1116, Part II R Reduction in taxes available for credit Form 1116, line 12 S Foreign trading gross receipts Form 8873 T Extraterritorial income exclusion Form 8873 U Section 965 information V Other foreign transactions 15. Alternative minimum tax (AMT) items A Post-1986 depreciation adjustment B Adjusted gain or loss C Depletion (other than oil & gas) D Oil, gas, & geothermal gross income E Oil, gas, & geothermal deductions F Other AMT items and the Instructions for Form Items affecting shareholder basis A Tax-exempt interest income Form 1040, line 2a B Other tax-exempt income C Nondeductible expenses D Distributions E Repayment of loans from shareholders 17. Other information A Investment income Form 4952, line 4a B Investment expenses Form 4952, line 5 C Qualified rehabilitation expenditures (other than rental real estate) D Basis of energy property E Recapture of low-income housing credit (section 42(j)(5)) Form 8611, line 8 F Recapture of low-income housing credit (other) Form 8611, line 8 G Recapture of investment credit See Form 4255 H Recapture of other credits I Look-back interest completed long-term contracts See Form 8697 J Look-back interest income forecast method See Form 8866 K Dispositions of property with section 179 deductions L Recapture of section 179 deduction M through U V Section 199A income W Section 199A W-2 wages X Section 199A unadjusted basis Y Section 199A REIT dividends Z Section 199A PTP income AA Excess taxable income AB Excess business interest income AC Other information

15 Schedule K-1 (Form 1120S) 2018 Department of the Treasury Internal Revenue Service For calendar year 2018, or tax year beginning / / 2018 ending / / DRAFT AS OF August 20, 2018 DO NOT FILE Shareholder s Share of Income, Deductions, Credits, etc. See back of form and separate instructions. A B C D Part I Information About the Corporation Corporation s employer identification number Corporation s name, address, city, state, and ZIP code. 415 Warren St. Ithaca, NY IRS Center where corporation filed return Ogden, UT Part II Information About the Shareholder Shareholder s identifying number Final K-1 Amended K-1 OMB No Part III Shareholder s Share of Current Year Income, Deductions, Credits, and Other Items 1 Ordinary business income (loss) 13 Credits 2 Net rental real estate income (loss) 3 Other net rental income (loss) 4 Interest income 5a Ordinary dividends 5b Qualified dividends 6 Royalties 7 Net short-term capital gain (loss) 8a Net long-term capital gain (loss) 8b Collectibles (28%) gain (loss) 374,870 39,426 13,972 8c Unrecaptured section 1250 gain 14 Foreign transactions E Shareholder s name, address, city, state, and ZIP code Norma Shipper 9 Net section 1231 gain (loss) 10 Other income (loss) 15 Alternative minimum tax (AMT) items F Shareholder s percentage of stock ownership for tax year % 11 Section 179 deduction 12 Other deductions 16 Items affecting shareholder basis D 150,000 For IRS Use Only 17 Other information A 53,398 V 392,322 W 1,600,000 X 14,177,716 * See attached statement for additional information. For Paperwork Reduction Act Notice, see the Instructions for Form 1120S. Cat. No D Schedule K-1 (Form 1120S) 2018 Page 15

16 Schedule K-1 (Form 1120S) 2018 Department of the Treasury Internal Revenue Service For calendar year 2018, or tax year beginning / / 2018 ending / / Shareholder s Share of Income, Deductions, Credits, etc. See back of form and separate instructions. A B C D Part I Information About the Corporation Corporation s employer identification number Corporation s name, address, city, state, and ZIP code. 415 Warren St. Ithaca, NY IRS Center where corporation filed return Ogden, UT Part II Information About the Shareholder Shareholder s identifying number Final K-1 Amended K-1 OMB No Part III Shareholder s Share of Current Year Income, Deductions, Credits, and Other Items 1 Ordinary business income (loss) 13 Credits 2 Net rental real estate income (loss) 3 Other net rental income (loss) 4 Interest income 5a Ordinary dividends 5b Qualified dividends 6 Royalties 7 Net short-term capital gain (loss) 8a Net long-term capital gain (loss) 8b Collectibles (28%) gain (loss) 149,912 15,770 5,589 8c Unrecaptured section 1250 gain 14 Foreign transactions E Shareholder s name, address, city, state, and ZIP code James Robertson 9 Net section 1231 gain (loss) 10 Other income (loss) 15 Alternative minimum tax (AMT) items F Shareholder s percentage of stock ownership for tax year % 11 Section 179 deduction 12 Other deductions 16 Items affecting shareholder basis D 60,000 For IRS Use Only 17 Other information A 21,359 V 156,929 W 640,000 X 5,671,086 * See attached statement for additional information. For Paperwork Reduction Act Notice, see the Instructions for Form 1120S. Cat. No D Schedule K-1 (Form 1120S) 2018 Page 16

17 Schedule K-1 (Form 1120S) 2018 Department of the Treasury Internal Revenue Service For calendar year 2018, or tax year beginning / / 2018 ending / / Shareholder s Share of Income, Deductions, Credits, etc. See back of form and separate instructions. A B C D Part I Information About the Corporation Corporation s employer identification number Corporation s name, address, city, state, and ZIP code. 415 Warren St. Ithaca, NY IRS Center where corporation filed return Ogden, UT Part II Information About the Shareholder Shareholder s identifying number Final K-1 Amended K-1 OMB No Part III Shareholder s Share of Current Year Income, Deductions, Credits, and Other Items 1 Ordinary business income (loss) 13 Credits 2 Net rental real estate income (loss) 3 Other net rental income (loss) 4 Interest income 5a Ordinary dividends 5b Qualified dividends 6 Royalties 7 Net short-term capital gain (loss) 8a Net long-term capital gain (loss) 8b Collectibles (28%) gain (loss) 224,868 23,655 8,384 8c Unrecaptured section 1250 gain 14 Foreign transactions E Shareholder s name, address, city, state, and ZIP code John Bouchet 9 Net section 1231 gain (loss) 10 Other income (loss) 15 Alternative minimum tax (AMT) items F Shareholder s percentage of stock ownership for tax year % 11 Section 179 deduction 12 Other deductions 16 Items affecting shareholder basis D 90,000 For IRS Use Only 17 Other information A 32,039 V 235,393 W 960,000 X 8,506,630 * See attached statement for additional information. For Paperwork Reduction Act Notice, see the Instructions for Form 1120S. Cat. No D Schedule K-1 (Form 1120S) 2018 Page 17

18 Form 1125-E (Rev. October 2016) Department of the Treasury Internal Revenue Service Name Compensation of Officers Attach to Form 1120, 1120-C, 1120-F, 1120-REIT, 1120-RIC, or 1120S. Information about Form 1125-E and its separate instructions is at Note: Complete Form 1125-E only if total receipts are $500,000 or more. See instructions for definition of total receipts. OMB No Employer identification number (a) Name of officer (b) Social security number (see instructions) (c) Percent of time devoted to business Percent of stock owned (d) Common (e) Preferred (f) Amount of compensation 1 James Robertson 40% 20% % 180,000. John Bouchet 60% 30% % 240,000. Norma Shipper 100% 50% % 460, Total compensation of officers Compensation of officers claimed on Form 1125-A or elsewhere on return , , Subtract line 3 from line 2. Enter the result here and on Form 1120, page 1, line 12 or the appropriate line of your tax return ,000. For Paperwork Reduction Act Notice, see separate instructions. BAA REV 11/13/17 TTBIZ Form 1125-E (Rev ) Page 18

19 Form 4562 Department of the Treasury Internal Revenue Service (99) Depreciation and Amortization (Including Information on Listed Property) Attach to your tax return. Go to for instructions and the latest information. OMB No Attachment Sequence No. 179 Name(s) shown on return Business or activity to which this form relates Identifying number Form 1120S Line Part I Election To Expense Certain Property Under Section 179 Note: If you have any listed property, complete Part V before you complete Part I. 1 Maximum amount (see instructions) , Total cost of section 179 property placed in service (see instructions) , Threshold cost of section 179 property before reduction in limitation (see instructions) ,030, Reduction in limitation. Subtract line 3 from line 2. If zero or less, enter Dollar limitation for tax year. Subtract line 4 from line 1. If zero or less, enter -0-. If married filing separately, see instructions , (a) Description of property (b) Cost (business use only) (c) Elected cost 7 Listed property. Enter the amount from line Total elected cost of section 179 property. Add amounts in column (c), lines 6 and Tentative deduction. Enter the smaller of line 5 or line Carryover of disallowed deduction from line 13 of your 2016 Form Business income limitation. Enter the smaller of business income (not less than zero) or line 5 (see instructions) Section 179 expense deduction. Add lines 9 and 10, but don t enter more than line Carryover of disallowed deduction to Add lines 9 and 10, less line Note: Don t use Part II or Part III below for listed property. Instead, use Part V. Part II Special Depreciation Allowance and Other Depreciation (Don t include listed property.) (See instructions.) 14 Special depreciation allowance for qualified property (other than listed property) placed in service during the tax year (see instructions) ,094, Property subject to section 168(f)(1) election Other depreciation (including ACRS) Part III MACRS Depreciation (Don t include listed property.) (See instructions.) Section A 17 MACRS deductions for assets placed in service in tax years beginning before If you are electing to group any assets placed in service during the tax year into one or more general asset accounts, check here Section B Assets Placed in Service During 2017 Tax Year Using the General Depreciation System (a) Classification of property (b) Month and year placed in service (c) Basis for depreciation (business/investment use only see instructions) (d) Recovery period (e) Convention (f) Method (g) Depreciation deduction 19a 3-year property b 5-year property c 7-year property d 10-year property e 15-year property f 20-year property g 25-year property 25 yrs. S/L h Residential rental 27.5 yrs. MM S/L property 27.5 yrs. MM S/L i Nonresidential real 39 yrs. MM S/L property MM S/L Section C Assets Placed in Service During 2017 Tax Year Using the Alternative Depreciation System 20a Class life S/L b 12-year 12 yrs. S/L c 40-year 40 yrs. MM S/L Part IV Summary (See instructions.) 21 Listed property. Enter amount from line Total. Add amounts from line 12, lines 14 through 17, lines 19 and 20 in column (g), and line 21. Enter here and on the appropriate lines of your return. Partnerships and S corporations see instructions. 22 2,094, For assets shown above and placed in service during the current year, enter the portion of the basis attributable to section 263A costs For Paperwork Reduction Act Notice, see separate instructions. BAA Page 19 REV 02/27/18 TTBIZ Form 4562 (2017)

20 Additional information from your 2017 US Form 1120S: Income Tax Return for S Corp Form 1120S: S-Corporation Tax Return Other Deductions Description Continuation Statement Amount Property insurance 651,243. Liability insurance 1,278,324. Accounting 25,755. Info. systems 32,798. Legal 147,359. Form 1120S: S-Corporation Tax Return M-1, Line 3, Expenses Recorded on Books, Not Included on Schedule K-1 Description Total 2,135,479. Continuation Statement Amount Interest 1,372,706. Bad debts 108,567. Total 1,481,273. Form 1120S: S-Corporation Tax Return M-2 Line 3, Other Additions Continuation Statement Description AAA Amount OAA Amount Interest income 78,851. Total Ord dividends 27,945. Total 106,796. Page 20