EFG, a calendar year, accrual basis corporation, reported $479,900 net income after tax on its financial statements prepared in accordance with GAAP. The corporation’s financial records reveal the following information:
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Prepare a Schedule M-1, page 6, Form 1120, reconciling EFG’s book and taxable income. (Any Expenses (Line 5) and Deductions (Line 8) that are not included under Depreciation, Charitable Contributions, and Travel and Entertainment should be combined in the corresponding line item “Other”. Enter all amounts as positive. Enter your answers in whole dollars not in millions. Do not round any intermediate division.) |
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(A)
Net profit after tax | $479900 | |
Add | Federal income tax | $151000 |
Add | Interest from tax free bonds | $10700 |
Less | Bad debt allowed (3700+4400) | $8100 |
Less | Fine from Government | $6000 |
Less | Depreciation | $44200 |
less | Loss on sale of asset | $8800 |
Profit after Deduction | $574500 | |
Add | Bad debt Recovered | $7400 |
add | Gain from sale of asset | $31000 |
NET TAXABLE INCOME | $612900 |
Tax = 612900* 30%==>183870 $
(B)
Net Income after Tax | $479900 | |
ADD | Items that decreased net income as per Books but does not effect Taxable Income | |
federal Income Tax as per books | $151000 | |
Excess of capital Loss over Capital Gain (31000-8800) | $22200 | |
Non deductible Expenses ( Government fine ) | $6000 | |
SUBTOTAL OF ADDITIONS | $179200 | |
LESS | Items that increased net income as per books but did not effect Taxable income | |
Tax exempt Interest Income | $10700 | |
Excess of MARCS Depreciation over Book depreciation (44200-31000) | $13200 | |
TAXABLE INCOME | $635200 |
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EFG, a calendar year, accrual basis corporation, reported $479,900 net income after tax on its financial...
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