ANALYSIS OF THE SELF-EMPLOYED BORROWER CASE STUDY. Copyright 2010 Genworth Financial, Inc. All Rights Reserved Rev. 1010

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1 ANALYSIS OF THE SELF-EMPLOYED BORROWER CASE STUDY Copyright 2010 Genworth Financial, Inc. All Rights Reserved Rev

2 a Employee s SSN b Employer ID No. (EIN) OMB No c Employer s name, address, and ZIP code 1 Wgs, tips, other compn 2 Fed inc tax withheld 3 Social security wages ZEN TODAY, INC SS tax withheld 5 Medicare wages & tips 6 Medicare tax withheld 2 HOLISTIC STREET RALEIGH NC Social security tips 8 Allocated tips 9 d Control No. e Employee s name, address, and ZIP code Suff. 10 Depdnt care benefits 11 Nonqualified plans 12a Other 12b Form W-2 Wage and Tax Statement 2011 Statutory employee MARY L HOMEOWNER 12c Copy B To Be Filed with Employee s FEDERAL 10 MAIN STREET Retirement plan Tax Return This information is being RALEIGH NC d furnished to the Internal Revenue Service. Third-party sick pay 15 State Employer s state ID number 16 State wages, tips, etc 17 State income tax 18 Local wages, tips, etc 19 Local income tax 20 Locality name NC Department of the Treasury ' IRS a Employee s SSN b Employer ID No. (EIN) OMB No c Employer s name, address, and ZIP code 1 Wgs, tips, other compn 2 Fed inc tax withheld 3 Social security wages ZEN TODAY, INC HOLISTIC STREET 4 SS tax withheld Medicare wages & tips Medicare tax withheld RALEIGH NC Social security tips 8 Allocated tips 9 d Control No. e Employee s name, address, and ZIP code Suff. 10 Depdnt care benefits 11 Nonqualified plans 12a Other 12b Form W-2 Wage and Tax Statement 2011 Statutory employee Copy 2 To Be MARY L HOMEOWNER 12c Filed With Employee s State, 10 MAIN STREET Retirement plan City, or Local RALEIGH NC d Income Tax Third-party sick pay Return. 15 State Employer s state ID No. 16 State wages, tips, etc 17 State income tax 18 Local wages, tips, etc 19 Local income tax 20 Locality name NC a Employee s SSN b Employer ID No. (EIN) OMB No c Employer s name, address, and ZIP code 1 Wgs, tips, other compn 2 Fed inc tax withheld 3 Social security wages ZEN TODAY, INC HOLISTIC STREET 4 SS tax withheld Medicare wages & tips Medicare tax withheld RALEIGH NC Social security tips 8 Allocated tips 9 d Control No. e Employee s name, address, and ZIP code Suff. 10 Depdnt care benefits 11 Nonqualified plans 12a Other 12b Form W-2 Wage and Tax Statement 2011 Statutory employee Copy 2 To Be MARY L HOMEOWNER 12c Filed With Employee s State, 10 MAIN STREET Retirement plan City, or Local RALEIGH NC d Income Tax Third-party sick pay Return. 15 State Employer s state ID No. 16 State wages, tips, etc 17 State income tax 18 Local wages, tips, etc 19 Local income tax 20 Locality name NC

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24 Car and Truck Expenses Worksheet 2011 G Keep for your records Name(s) Shown on Return Social Security Number John & Mary Homeowner Activity: Sch F Delicious Orchards Part I ' Vehicle Information 1 Make and model of vehicle John Deer Example: Ford Taurus 2 Date placed in service 01/01/2009 Example: 06/15/ Type of vehicle D - Truck tractor 4 a Ending mileage reading Enter mileage readings, or b Beginning mileage reading enter total miles on line 4c c Total miles vehicle was driven during ,001 Line 4a less line 4b 5 a Number of business miles from 01/01/11 thru 06/30/11 1,000 b Number of business miles from 07/01/11 thru 12/31/11 1,001 6 Number of miles driven for commuting Travel between home and work 7 Number of miles driven for personal purposes 0 Line 4c less line 5 and 6 8 Percent of business use % Line 5, divided by 4c 9 Months for special allocation See Tax Help 10 Do you have another vehicle available for personal use? X Yes No 11 Was the vehicle available for personal use during off duty hours? Yes X No 12 Was the vehicle used primarily by a more than 5% owner of the business or related person? X Yes No 13 a Do you have evidence to support the business use claimed? X Yes No b If Yes, is the evidence written? X Yes No Part II ' Standard Mileage Rate 14 Did you own this vehicle, lease this vehicle, or was it not your vehicle? X Own Lease Not my vehicle 15 Did you use this vehicle for hire? Yes X No Example: taxicab 16 Did you use less than 5 vehicles for business at a time? X Yes No 17 If you owned this vehicle, did you use the standard Only applies to mileage rate for this vehicle s first year, OR vehicles placed if you leased this vehicle, did you use the standard in service in mileage rate for the portion of the lease period after 1997? X Yes No prior years If you answered Own or Lease to line 14, and Yes to lines 16 and 17 you can take standard mileage for this vehicle (note: Line 15, vehicle for hire, is now allowed): 18 a Std mileage deduction for 1/1 thru 6/ line 5a times.51 b Std mileage deduction for 7/1 thru 12/ line 5b times.555 c Standard mileage deduction 1,066. line 18a plul line 18b Part III ' Actual Expenses 19 a Gasoline f Vehicle registration, license b Oil (excluding property tax) c Tires g Garage rent d Repairs h Vehicle lease or rental fees e Vehicle insurance i Less: inclusion amount ( ) j Other 20 Expenses subtotal Sum of lines 19a thru 19j 21 Expenses applicable to business Line 20 times line 8 22 Vehicle depreciation and Section 179 From Part VI 23 Total actual expenses Line 21 plus line 22 24

25 John & Mary Homeowner Page 2 Vehicle: Activity: John Deer Sch F Delicious Orchards Part IV ' Standard Mileage versus Actual Expenses 24 X Standard mileage 1,066. The program automatically chooses the method 25 Actual expenses that gives you the largest deduction. Check the other method if you want to use it instead. Part V ' Total Car and Truck Expenses 26 Line 24 or line 25 1, Additional expenses: a Parking fees b Tolls c Local transportation d Property taxes (include property tax portion of registration) e Less: personal portion of property taxes ( ) f Interest on vehicle g Less: personal portion of vehicle interest ( ) 28 Total expenses 1,066. Sum of lines 26 & 27a thru 27g. 29 Less: business portion of lease or rental fees Line 19h - 19i times line 8. less inclusion amount (if using actual expenses) ( ) Reported separately. 30 Less: depreciation and Section 179 (if using From line 22. actual expenses) ( ) Reported separately. 31 Total car and truck expenses 1,066. Part VI ' Vehicle Depreciation Information 32 Enter the total cost when vehicle Include sales tax. For trade-in or vehicle was acquired converted from personal use, see Tax Help. 33 Enter the amount of Section 179 Cannot be greater than expense elected limit shown below. 34 Depreciation and Section 179 limit for luxury cars See Tax Help for computation. 35 a Economic Stimulus - Qualified Property Yes X No b Qualified Disaster Area - Qualified Property Yes X No c Kansas Disaster Zone - Qualified Property Yes No d Gulf Opportunity Zone - Qualified Property Reg Ext No e Percentage for Special Depreciation Allowance 100% & 50% 30% N/A f Elect OUT of Special Depreciation Allowance Yes No g Elect 30% in place of 50% Special Depreciation Allowance Yes No h QuickZoom to view the Election statements i Special Depreciation Allowance j AMT Special Depr Allowance If blank, prior depreciation from Asset Life History is used. Required if sold, or if standard mileage rate used in a prior year. 36 Prior depreciation 37 Depreciation deduction Limited to luxury car maximum. If blank, prior depreciation from Asset Life History is used. Required if sold, or if standard mileage rate used in a prior year. 38 AMT prior depreciation 39 AMT depreciation deduction Limited to luxury car maximum. 40 AMT adjustment/preference See Tax Help for computation. 41 QuickZoom to Asset Life History 25

26 John & Mary Homeowner Page 3 Vehicle: Activity: John Deer Sch F Delicious Orchards Part VII ' Disposition of Vehicle ' Complete this part only if you sold, abandoned, or otherwise disposed of this vehicle, or removed it from business use in Date vehicle sold, given away or abandoned Example: 5/01/ Date vehicle acquired, if different from line 2 If converted from personal use 44 Sales price Enter business portion only 45 Expense of sale Enter business portion only 46 Sec 179 deduction allowed 47 Double click to link sale to Form a Double click to link sale to Form 8824 b Form 8824: Depreciation at 100% business use c Form 8824: AMT depr at 100% business use 49 Gain/loss basis, if different from line 32 Enter 100% of basis 50 AMT gain/loss basis, if different from line 72 Enter 100% of basis 51 Depreciation allowed or allowable 52 AMT depreciation allowed or allowable 53 Gain or loss 54 AMT gain or loss 55 Part of Form 4797 to which gain/loss carries Part VIII ' Detail Vehicle Depreciation Information ' This section is calculated for most vehicles from the data entered above. Use Find Next Error feature to check for any required entries. 56 Subject to automobile limitations? Yes No 57 Truck or van? Yes No 58 Electric passenger vehicle? Yes X No 59 Heavy SUV? Yes No 60 Listed property? Yes X No See Tax Help. 61 Eligible Section 179 property? Yes No Applies to current year assets only. 62 Use IRS tables for MACRS property? Yes No 63 Indian reservation property? Yes X No Regular Depreciation 64 Depreciation type 65 Asset class 66 Depreciation method 67 MACRS convention 68 QuickZoom to set 2011 convention 69 Recovery period 70 Year of depreciation 71 Depreciable basis Alternative Minimum Tax Depreciation 72 AMT basis, if different from line AMT depreciation method 74 AMT recovery period 75 AMT depreciable basis 26

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29 Schedule K-1 (Form 1065) 2011 Department of the Treasury Internal Revenue Service For calendar year 2011, or tax year beginning, 2011 ending, 20 Partner s Share of Income, Deductions, Credits, etc. See back of form and separate instructions. A B Part I Information About the Partnership Partnership s employer identification number Partnership s name, address, city, state, and ZIP code Recycle Fitness, LLC 1 Weight Loss Way Carey, NC Part III Final K-1 Amended K OMB No Partner s Share of Current Year Income, Deductions, Credits, and Other Items 1 Ordinary business income (loss) 2 Net rental real estate income (loss) 3 Other net rental income (loss) 4 Guaranteed payments 5 Interest income 6a 6b Ordinary dividends Qualified dividends 21, Credits 16 Foreign transactions C D E F IRS Center where partnership filed return Part II Check if this is a publicly traded partnership (PTP) Information About the Partner Partner s identifying number Partner s name, address, city, state, and ZIP code John Homeowner 10 Main Street Raleigh, NC Royalties 8 Net short-term capital gain (loss) 9a Net long-term capital gain (loss) 9b Collectibles (28%) gain (loss) 9c Unrecaptured section 1250 gain 10 Net section 1231 gain (loss) 11 Other income (loss) 17 Alternative minimum tax (AMT) items 18 Tax-exempt income and nondeductible expenses G General partner or LLC member-manager Limited partner or other LLC member H Domestic partner Foreign partner I J What type of entity is this partner? Individual Partner s share of profit, loss, and capital (see instructions): Beginning Ending Profit % % Loss % % Capital % % Section 179 deduction 13 Other deductions 19 Distributions A 9, Other information K L Partner s share of liabilities at year end: Nonrecourse $ Qualified nonrecourse financing. $ Recourse $ Partner s capital account analysis: Beginning capital account... $ Capital contributed during the year $ Current year increase (decrease). $ Withdrawals & distributions.. $ ( ) Ending capital account.... $ Tax basis GAAP Section 704(b) book Other (explain) 21,911 21,346 9,000 34, Self-employment earnings (loss) A 21,346 C 21,366 *See attached statement for additional information. For IRS Use Only M Did the partner contribute property with a built-in gain or loss? Yes No If Yes, attach statement (see instructions) For Paperwork Reduction Act Notice, see Instructions for Form Cat. No R Schedule K-1 (Form 1065) 2011

30 Form 1065 Department of the Treasury Internal Revenue Service A Principal business activity wholesale B Principal product or service used equipment C Business code number U.S. Return of Partnership Income For calendar year 2011, or tax year beginning, 2011, ending, 20. See separate instructions. Print or type. Name of partnership Recycle Fitness, LLC Number, street, and room or suite no. If a P.O. box, see the instructions. 1 Weight Loss Way City or town, state, and ZIP code Carey, NC OMB No D Employer identification number E Date business started 1/1/2000 F Total assets (see the instructions) $ 136,317 G Check applicable boxes: (1) Initial return (2) Final return (3) Name change (4) Address change (5) Amended return (6) Technical termination - also check (1) or (2) H Check accounting method: (1) Cash (2) Accrual (3) Other (specify) I Number of Schedules K-1. Attach one for each person who was a partner at any time during the tax year 2 J Check if Schedules C and M-3 are attached Caution. Include only trade or business income and expenses on lines 1a through 22 below. See the instructions for more information. Income Deductions (see the instructions for limitations) Sign Here 1a Merchant card and third-party payments (including amounts reported on Form(s) 1099-K). For 2011, enter a 207,723 b Gross receipts or sales not reported on line 1a (see instructions) 1b c Total. Add lines 1a and 1b c 207,723 d Returns and allowances plus any other adjustments to line 1a (see instructions) d e Subtract line 1d from line 1c e 2 Cost of goods sold (attach Form 1125-A) ,991 3 Gross profit. Subtract line 2 from line 1e Ordinary income (loss) from other partnerships, estates, and trusts (attach statement) Net farm profit (loss) (attach Schedule F (Form 1040)) Net gain (loss) from Form 4797, Part II, line 17 (attach Form 4797) Other income (loss) (attach statement) Total income (loss). Combine lines 3 through Salaries and wages (other than to partners) (less employment credits) Guaranteed payments to partners Repairs and maintenance Bad debts Rent Taxes and licenses Interest a Depreciation (if required, attach Form 4562) a b Less depreciation reported on Form 1125-A and elsewhere on return 16b 16c 17 Depletion (Do not deduct oil and gas depletion.) Retirement plans, etc Employee benefit programs Other deductions (attach statement) Total deductions. Add the amounts shown in the far right column for lines 9 through Ordinary business income (loss). Subtract line 21 from line 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 general partner or limited liability company member manager) is based on all information of which preparer has any knowledge. May the IRS discuss this return with the preparer shown below (see instructions)? Yes No Signature of general partner or limited liability company member manager Date Print/Type preparer s name Preparer s signature Date PTIN Check if Bob Cracket self- employed P Firm s name Cracket CPA's Firm's EIN Firm s address Phone no For Paperwork Reduction Act Notice, see separate instructions. Cat. No Z Form 1065 (2011) 42,732 42, ,692 30

31 Form 1065 (2011) Page 2 Schedule B Other Information 1 What type of entity is filing this return? Check the applicable box: Yes No a Domestic general partnership b Domestic limited partnership c Domestic limited liability company d Domestic limited liability partnership e Foreign partnership f Other 2 At any time during the tax year, was any partner in the partnership a disregarded entity, a partnership (including an entity treated as a partnership), a trust, an S corporation, an estate (other than an estate of a deceased partner), or a nominee or similar person? At the end of the tax year: a Did any foreign or domestic corporation, partnership (including any entity treated as a partnership), trust, or tax-exempt organization, or any foreign government own, directly or indirectly, an interest of 50% or more in the profit, loss, or capital of the partnership? For rules of constructive ownership, see instructions. If Yes, attach Schedule B-1, Information on Partners Owning 50% or More of the Partnership b Did any individual or estate own, directly or indirectly, an interest of 50% or more in the profit, loss, or capital of the partnership? For rules of constructive ownership, see instructions. If Yes, attach Schedule B-1, Information on Partners Owning 50% or More of the Partnership At the end of the tax year, did the partnership: a Own directly 20% or more, or own, directly or indirectly, 50% or more of the total voting power of all classes of stock entitled to vote of any foreign or domestic corporation? For rules of constructive ownership, see instructions. If Yes, complete (i) through (iv) below (i) Name of Corporation (ii) Employer Identification Number (if any) (iii) Country of Incorporation (iv) Percentage Owned in Voting Stock 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 Form 1065 (2011) 31

32 Form 1065 (2011) Page 3 5 Did the partnership file Form 8893, Election of Partnership Level Tax Treatment, or an election statement under section 6231(a)(1)(B)(ii) for partnership-level tax treatment, that is in effect for this tax year? See Form 8893 for more details Does the partnership satisfy all four of the following conditions? a The partnership s total receipts for the tax year were less than $250,000. b The partnership s total assets at the end of the tax year were less than $1 million. c Schedules K-1 are filed with the return and furnished to the partners on or before the due date (including extensions) for the partnership return. d The partnership is not filing and is not required to file Schedule M If Yes, the partnership is not required to complete Schedules L, M-1, and M-2; Item F on page 1 of Form 1065; or Item L on Schedule K-1. 7 Is this partnership a publicly traded partnership as defined in section 469(k)(2)? During the tax year, did the partnership have any debt that was cancelled, was forgiven, or had the terms modified so as to reduce the principal amount of the debt? Has this partnership filed, or is it required to file, Form 8918, Material Advisor Disclosure Statement, to provide information on any reportable transaction? At any time during calendar year 2011, did the partnership have an interest in or a signature or other authority over a financial account in a foreign country (such as a bank account, securities account, or other financial account)? See the instructions for exceptions and filing requirements for Form TD F , Report of Foreign Bank and Financial Accounts. If Yes, enter the name of the foreign country. 11 At any time during the tax year, did the partnership receive a distribution from, or was it the grantor of, or transferor to, a foreign trust? If Yes, the partnership may have to file Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts. See instructions a Is the partnership making, or had it previously made (and not revoked), a section 754 election? See instructions for details regarding a section 754 election. b Did the partnership make for this tax year an optional basis adjustment under section 743(b) or 734(b)? If Yes, attach a statement showing the computation and allocation of the basis adjustment. See instructions.... c Is the partnership required to adjust the basis of partnership assets under section 743(b) or 734(b) because of a substantial built-in loss (as defined under section 743(d)) or substantial basis reduction (as defined under section 734(d))? If Yes, attach a statement showing the computation and allocation of the basis adjustment. See instructions. 13 Check this box if, during the current or prior tax year, the partnership distributed any property received in a like-kind exchange or contributed such property to another entity (other than disregarded entities wholly-owned by the partnership throughout the tax year) At any time during the tax year, did the partnership distribute to any partner a tenancy-in-common or other undivided interest in partnership property? If the partnership is required to file Form 8858, Information Return of U.S. Persons With Respect To Foreign Disregarded Entities, enter the number of Forms 8858 attached. See instructions 16 Does the partnership have any foreign partners? If Yes, enter the number of Forms 8805, Foreign Partner s Information Statement of Section 1446 Withholding Tax, filed for this partnership. 17 Enter the number of Forms 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships, attached to this return. 18 a Did you make any payments in 2011 that would require you to file Form(s) 1099? See instructions..... b If Yes, did you or will you file all required Form(s) 1099? Enter the number of Form(s) 5471, Information Return of U.S. Persons With Respect To Certain Foreign Corporations, attached to this return. Designation of Tax Matters Partner (see instructions) Enter below the general partner designated as the tax matters partner (TMP) for the tax year of this return: Yes No Name of designated TMP If the TMP is an entity, name of TMP representative Address of 765 Penthouse Drive designated TMP Raleigh, NC Identifying Arnold Stalone number of TMP Phone number of TMP Form 1065 (2011) 32

33 Form 1065 (2011) Page 4 Schedule K Partners Distributive Share Items Total amount 1 Ordinary business income (loss) (page 1, line 22) ,692 2 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 Guaranteed payments Interest income Dividends: a Ordinary dividends a b Qualified dividends b 7 Royalties Net short-term capital gain (loss) (attach Schedule D (Form 1065)) a Net long-term capital gain (loss) (attach Schedule D (Form 1065)) a b Collectibles (28%) gain (loss) b c Unrecaptured section 1250 gain (attach statement).. 9c 10 Net section 1231 gain (loss) (attach Form 4797) Other income (loss) (see instructions) Type Section 179 deduction (attach Form 4562) a Contributions a b Investment interest expense b c Section 59(e)(2) expenditures: (1) Type (2) Amount 13c(2) d Other deductions (see instructions) Type 13d 14a Net earnings (loss) from self-employment a 42,692 b Gross farming or fishing income b c Gross nonfarm income c 43,732 Income (Loss) Deductions Self- Employment Credits Foreign Transactions Alternative Minimum Tax (AMT) Items Other Information 15a 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) c d Other rental real estate credits (see instructions) Type 15d e Other rental credits (see instructions) Type 15e f Other credits (see instructions) Type 15f 16a Name of country or U.S. possession b Gross income from all sources b c Gross income sourced at partner level c Foreign gross income sourced at partnership level d Passive category e General category f Other 16f Deductions allocated and apportioned at partner level g Interest expense h Other h Deductions allocated and apportioned at partnership level to foreign source income i Passive category j General category k Other 16k 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) 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 18a Tax-exempt interest income a b Other tax-exempt income b c Nondeductible expenses c 19a Distributions of cash and marketable securities a b Distributions of other property b 20a Investment income a b Investment expenses b c Other items and amounts (attach statement) ,000 Form 1065 (2011)

34 Form 1065 (2011) Page 5 Analysis of Net Income (Loss) 1 Net income (loss). Combine Schedule K, lines 1 through 11. From the result, subtract the sum of Schedule K, lines 12 through 13d, and 16l ,692 2 Analysis by partner type: (i) Corporate (ii) Individual (active) (iii) Individual (passive) (iv) Partnership (v) Exempt organization (vi) Nominee/Other a General partners b Limited partners 42,692 Schedule L Balance Sheets per Books Beginning of tax year End of tax year Assets (a) (b) (c) (d) 1 Cash ,733 32,649 2a Trade notes and accounts receivable ,708 12,276 b Less allowance for bad debts ,704 12,276 3 Inventories ,392 4 U.S. government obligations Tax-exempt securities Other current assets (attach statement).. 7a Loans to partners (or persons related to partners) b Mortgage and real estate loans Other investments (attach statement)... 9a Buildings and other depreciable assets.. b Less accumulated depreciation a Depletable assets b Less accumulated depletion Land (net of any amortization) a Intangible assets (amortizable only)... b Less accumulated amortization Other assets (attach statement) Total assets , ,317 Liabilities and Capital 15 Accounts payable ,413 77, Mortgages, notes, bonds payable in less than 1 year 17 Other current liabilities (attach statement). 18 All nonrecourse loans a Loans from partners (or persons related to partners) b Mortgages, notes, bonds payable in 1 year or more 20 Other liabilities (attach statement) Partners capital accounts ,028 58, Total liabilities and capital , ,317 Schedule M-1 Reconciliation of Income (Loss) per Books With Income (Loss) per Return Note. Schedule M-3 may be required instead of Schedule M-1 (see instructions). 1 Net income (loss) per books ,692 6 Income recorded on books this year not included 2 Income included on Schedule K, lines 1, 2, 3c, on Schedule K, lines 1 through 11 (itemize): 5, 6a, 7, 8, 9a, 10, and 11, not recorded on a Tax-exempt interest $ books this year (itemize): 3 Guaranteed payments (other than 7 Deductions included on Schedule K, lines health insurance) through 13d, and 16l, not charged 4 Expenses recorded on books this year not included on Schedule K, lines 1 against book income this year (itemize): a Depreciation $ through 13d, and 16l (itemize): a Depreciation $ 8 Add lines 6 and b Travel and entertainment $ 9 Income (loss) (Analysis of Net Income 5 Add lines 1 through ,692 (Loss), line 1). Subtract line 8 from line 5. 42,692 Schedule M-2 Analysis of Partners Capital Accounts 1 Balance at beginning of year... 34,028 6 Distributions: a Cash ,000 2 Capital contributed: a Cash... b Property..... b Property.. 7 Other decreases (itemize): 3 Net income (loss) per books ,692 4 Other increases (itemize): 8 Add lines 6 and ,000 5 Add lines 1 through ,720 9 Balance at end of year. Subtract line 8 from line 5 58, Form 1065 (2011)

35 Schedule K-1 (Form 1120S) Department of the Treasury Internal Revenue Service 2011 For calendar year 2011, or tax year beginning, 2011 ending, 20 Shareholder s Share of Income, Deductions, Credits, etc. See back of form and separate instructions. Part I Information About the Corporation 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 502,619 A B Corporation s employer identification number Corporation s name, address, city, state, and ZIP code Zen Today, Inc 2 Holistic Street Raleigh, NC a Ordinary dividends 5b Qualified dividends 6 Royalties 7 Net short-term capital gain (loss) 14 Foreign transactions C IRS Center where corporation filed return 8a Net long-term capital gain (loss) Part II Information About the Shareholder 8b Collectibles (28%) gain (loss) D E Shareholder s identifying number Shareholder s name, address, city, state, and ZIP code Mary Homeowner 10 Main Street Raleigh, NC c Unrecaptured section 1250 gain 9 Net section 1231 gain (loss) 10 Other income (loss) 15 Alternative minimum tax (AMT) items A -1,229 F Shareholder s percentage of stock ownership for tax year % 11 Section 179 deduction 12 Other deductions A Items affecting shareholder basis C 6,778 D 338,882 For IRS Use Only 17 Other information * See attached statement for additional information. For Paperwork Reduction Act Notice, see Instructions for Form 1120S. Cat. No D Schedule K-1 (Form 1120S)

36 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. See separate instructions. Department of the Treasury Internal Revenue Service For calendar year 2011 or tax year beginning, 2011, ending, 20 OMB No A S election effective date Name D Employer identification number TYPE Zen Today, Inc B Business activity code Number, street, and room or suite no. If a P.O. box, see instructions. E Date incorporated number (see instructions) OR 2 Holistic Street PRINT City or town, state, and ZIP code F Total assets (see instructions) C Check if Sch. M-3 attached Raleigh, NC $ 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. 1 a Merchant card and third-party payments. For 2011, enter a 0 b Gross receipts or sales not reported on line 1a (see instructions).. 1b 14,384,435 c Total. Add lines 1a and 1b c 14,384,435 d Returns and allowances plus any other adjustments (see instructions) 1d e Subtract line 1d from line 1c e 14,384,435 2 Cost of goods sold (attach Form 1125-A) ,690,559 3 Gross profit. Subtract line 2 from line 1e ,693,876 4 Net gain (loss) from Form 4797, Part II, line 17 (attach Form 4797) Other income (loss) (see instructions attach statement) Total income (loss). Add lines 3 through ,693,876 7 Compensation of officers ,200 8 Salaries and wages (less employment credits) ,322,809 9 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) ,134, Total deductions. Add lines 7 through ,943, 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 0 23 a 2011 estimated tax payments and 2010 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 0 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 2012 estimated tax Refunded 27 0 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 Sign with the preparer shown below President (see instructions)? Here Signature of officer Date Title Yes No Print/Type preparer s name Preparer's signature Date PTIN Paid Check if Bob Crachet self-employed Preparer Firm s name M R Wright CPA's Firm's EIN Use Only Firm's address Raleigh, NC Phone no. For Paperwork Reduction Act Notice, see separate instructions. Cat. No H Form 1120S (2011) 36 Income Deductions (see instructions for limitations) Tax and Payments

37 Form 1120S (2011) Page 2 Schedule B Other Information (see instructions) Yes No 1 Check accounting method: a Cash b Accrual c Other (specify) 2 See the instructions and enter the: a Business activity Professional b Product or service Medical/Health Services 3 At the end of the tax year, did the corporation own, directly or indirectly, 50% or more of the voting stock of a domestic corporation? (For rules of attribution, see section 267(c).) If Yes, attach a statement showing: (a) name and employer identification number (EIN), (b) percentage owned, and (c) if 100% owned, was a qualified subchapter S subsidiary election made? 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. 6 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) $ 7 Enter the accumulated earnings and profits of the corporation at the end of the tax year. $ 8 Are the corporation s total receipts (see instructions) for the tax year and its total assets at the end of the tax year less than $250,000? If Yes, the corporation is not required to complete Schedules L and M During the tax year, was a qualified subchapter S subsidiary election terminated or revoked? If "Yes," see instructions. 10 a Did the corporation make any payments in 2011 that would require it to file Form(s) 1099 (see instructions)?.... b If Yes, did the corporation file or will it file all required Forms 1099? Schedule K Shareholders Pro Rata Share Items Total amount 1 Ordinary business income (loss) (page 1, line 21) ,177 2 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 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 10 Income (Loss) Form 1120S (2011) 37

38 Form 1120S (2011) Page 3 Shareholders Pro Rata Share Items (continued) Total amount Deductions Credits Foreign Transactions Alternative Minimum Tax (AMT) Items Items Affecting Shareholder Basis Other Information 11 Section 179 deduction (attach Form 4562) a 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) c d Other rental real estate credits (see instructions) Type 13d e Other rental credits (see instructions)... Type 13e f Alcohol and cellulosic biofuel fuels credit (attach Form 6478) f g Other credits (see instructions)..... Type 13g 14a Name of country or U.S. possession 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 17a Investment income a b Investment expenses b c Dividend distributions paid from accumulated earnings and profits c d Other items and amounts (attach statement) 75-1,835 10, ,794 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 ,102 Form 1120S (2011) 38

39 Form 1120S (2011) Page 4 Schedule L Balance Sheets per Books Beginning of tax year End of tax year 1 Cash a Trade notes and accounts receivable... b Less allowance for bad debts Inventories U.S. government obligations Tax-exempt securities (see instructions).. 6 Other current assets (attach statement)... 7 Loans to shareholders Mortgage and real estate loans Other investments (attach statement)... 10a Buildings and other depreciable assets... b Less accumulated depreciation a Depletable assets b Less accumulated depletion Land (net of any amortization) a Intangible assets (amortizable only).... b Less accumulated amortization Other assets (attach statement) Total assets Liabilities and Shareholders Equity Assets (a) (b) (c) (d) 85, ,273 ( ) ( ) 481,788 ( 385,638 ) 96,150 ( 402,276 ) 79,512 ( ) ( ) ( ) ( ) 16 Accounts payable Mortgages, notes, bonds payable in less than 1 year 109, , Other current liabilities (attach statement).. 13,607 2, Loans from shareholders Mortgages, notes, bonds payable in 1 year or more 182,833 78, Other liabilities (attach statement) Capital stock Additional paid-in capital ,055 33, Retained earnings , , Adjustments to shareholders equity (attach statement) 26 Less cost of treasury stock ( 26,536 ) ( 26,536 ) 27 Total liabilities and shareholders equity.. 263, ,472 Schedule M-1 Reconciliation of Income (Loss) per Books With Income (Loss) per Return Note. Schedule M-3 required instead of Schedule M-1 if total assets are $10 million or more see instructions 1 Net income (loss) per books Income included on Schedule K, lines 1, 2, 3c, 4, 5a, 6, 7, 8a, 9, and 10, not recorded on books this year (itemize) 3 Expenses recorded on books this year not included on Schedule K, lines 1 through 12 and 14l (itemize): a Depreciation $ b Travel and entertainment $ 10,117 5 Income recorded on books this year not included on Schedule K, lines 1 through 10 (itemize): a Tax-exempt interest $ 6 Deductions included on Schedule K, lines 1 through 12 and 14l, not charged against book income this year (itemize): a Depreciation $ 10,117 7 Add lines 5 and Add lines 1 through ,102 8 Income (loss) (Schedule K, line 18). Line 4 less line 7 750,102 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 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 6 739,985 (a) Accumulated adjustments account -50, ,177 (b) Other adjustments account ( ) ( 10,192 ) ( ) 689, , , ,139 90, , ,472 (c) Shareholders undistributed taxable income previously taxed Form 1120S (2011)

40 Form 1120 Department of the Treasury Internal Revenue Service A Check if: 1a Consolidated return (attach Form 851). b Life/nonlife consolidated return... 2 Personal holding co. (attach Sch. PH).. 3 Personal service corp. (see instructions).. 4 Schedule M-3 attached Income Deductions (See instructions for limitations on deductions.) Tax, Refundable Credits, and Payments Sign Here U.S. Corporation Income Tax Return For calendar year 2011 or tax year beginning, 2011, ending, 20 OMB No See separate instructions. Name B Employer identification number Homecare Finders, Inc TYPE Number, street, and room or suite no. If a P.O. box, see instructions. C Date incorporated OR 942 Hospital Highway 01/02/03 PRINT City or town, state, and ZIP code D Total assets (see instructions) Quaintville, PA $ 172,000 E Check if: (1) Initial return (2) Final return (3) Name change (4) Address change 1a Merchant card and third-party payments. For 2011, enter a 0 b Gross receipts or sales not reported on line 1a (see instructions) b 850,000 c Total. Add lines 1a and 1b c 88,000 d Returns and allowances plus any other adjustments (see instructions)... 1d 2,000 e Subtract line 1d from line 1c e 760,000 2 Cost of goods sold from Form 1125-A, line 8 (attach Form 1125-A) Gross profit. Subtract line 2 from line 1e Dividends (Schedule C, line 19) Interest Gross rents Gross royalties Capital gain net income (attach Schedule D (Form 1120)) Net gain or (loss) from Form 4797, Part II, line 17 (attach Form 4797) Other income (see instructions attach schedule) Total income. Add lines 3 through Compensation of officers from Form 1125-E, line 4 (attach Form 1125-E) Salaries and wages (less employment credits) Repairs and maintenance Bad debts Rents Taxes and licenses Interest Charitable contributions Depreciation from Form 4562 not claimed on Form 1125-A or elsewhere on return (attach Form 4562) Depletion Advertising Pension, profit-sharing, etc., plans Employee benefit programs Domestic production activities deduction (attach Form 8903) Other deductions (attach schedule) Total deductions. Add lines 12 through Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line a Net operating loss deduction (see instructions) a b Special deductions (Schedule C, line 20) b c Add lines 29a and 29b c 30 Taxable income. Subtract line 29c from line 28 (see instructions) Total tax (Schedule J, Part I, line 11) Total payments and refundable credits (Schedule J, Part II, line 21) Estimated tax penalty (see instructions). Check if Form 2220 is attached Amount owed. If line 32 is smaller than the total of lines 31 and 33, enter amount owed Overpayment. If line 32 is larger than the total of lines 31 and 33, enter amount overpaid Enter amount from line 35 you want: Credited to 2012 estimated tax 30 Refunded 36 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)? Yes No Signature of officer Date Title Print/Type preparer s name Preparer's signature Date PTIN Check if self-employed Firm s name Firm's EIN Firm's address Phone no. For Paperwork Reduction Act Notice, see separate instructions. 40 Cat. No Q Form 1120 (2011) For Educational Purposes Only Page , , , ,000 10,000 24,000 15,000 1,000 25,000 15,000 80,000 35,000 40,000 25, ,000 10, ,000 1,500 30