Mutt Cutts Corporation is organized as a C-Corporation and was incorporated December 6, 1994…. 1 answer below »

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SCENARIO: Mutt Cutts Corporation is organized as a C-Corporation and was incorporated December 6,

1994. The company was founded by two friends, Lloyd Christmas and Harry Dunne. Lloyd, a former

limousine driver, and Harry, a former dog groomer, decided to combine their expertise to start a mobile

dog grooming business. Lloyd and Harry are the only two shareholders of Mutt Cutts. The corporation

manufactures and services specialty mobile grooming vans for use by pet stores (NAICS code number

336100). The corporation has reported positive financial and taxable income since inception. The

company headquarters is located at 76 Queen Street, Charleston, South Carolina 29401. The company’s

employer identification number is 77-7777777, and the company uses a calendar year for tax purposes.

In 2019, Mutt Cutts changed its address from last year’s return. Mutt Cutts’ phone number is 843-718-

3224.

Lloyd J. Christmas (social security number 999-99-9999) is a 51 percent shareholder and president/CEO

of the company. Harry L. Dunne (social security number 888-88-8888) is a 49 percent shareholder and

vice president/CFO of the company. The other two officers of the company are: (1) COO: Mary H.

Swanson (social security number: 555-55-5555) and (2) Tax Director: Nicholas R. Andre (social security

number: 123-45-6789). The company does not have any preferred stock. The officer’s compensation for

2019 was as follows: (1) Lloyd: $200,000; (2) Harry: $200,000; (3) Mary: $140,000; and (4) Nicholas:

$260,000. You can assume that due to their expertise, all of these amounts meet the test of being both

ordinary and necessary as well as reasonable in amount (under IRC §162). All officers are U.S. citizens

and devote 100 percent of their time to the corporation.

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