Exam Corporation reports taxable income of $800,000 on its federal income tax return. Given the following...
Exam Corporation reports taxable income of $800,000 on its federal income tax return. Given the following information from the corporation's records, determine its M-1 book income:
Deduction for federal income taxes per
financial accounting records $272,000
Depreciation claimed on the tax return 140,000
Depreciation recorded on the financial accounting records 80,000
Dividends-received deduction 48,000
Life insurance proceeds on death of corporate officer 90,000
Homework Answers
| Exam Corporation M-1 Book Income Caluculation:- | |||||
| Notes | Particulars | Amount | |||
| Taxable Income | 800000 | ||||
| 1 | Add:- | Deduction for federal income taxes per financial accounting records | 272000 | ||
| 2 | Add:- | Difference of depreciation (140000-80000) | 60000 | ||
| 3 | Add:- | Dividends-received deduction | 48000 | ||
| 4 | Add:- | Life insurance proceeds on death of corporate officer | - | ||
| Book Income | 1180000 | ||||
| Notes | |||||
| 1 | These are general deductions when we calculate taxable income, so added back | ||||
| 2 | Depreciation as per income tax is more than depreciation as per book value, so difference is added back | ||||
| 3 | When company recieves the dividend they can get deduction under the provision of tax laws so added back | ||||
| 4 | Some companies take insurance of key officials and the proceeds they receive is not taxable, this is already included in taxable income, no need to add back again | ||||
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