Question

Jackson Corporation prepared the following book income statement for its year ended December 31, 2017: Computations for Problem C:3-64 Sales $950,000 Minus: Cost of goods sold (450,000) Gross profit $500,000 Plus: Dividends received on Invest Corporation stock $3,000 Gain on sale of Invest Corporation stock 30,000 Total dividends and gain 33,000 Minus: Depreciation ($7,500+$52,000) $59,500 Bad debt expense 22,000 Other operating expenses 105,500 Loss on sale of Equipment 1 70,000 Total expenses and loss (257,000) Net income per books before taxes $276,000 Minus: Federal income tax expense (90,000) Net income per books $186,000 Information on equipment depreciation and sale: Equipment 1: Acquired March 3, 2015 for $180,000 For books: 12-year life; straight-line depreciation Sold February 17, 2017 for $80,000 Computations for Problem C:3-64 Sales price $80,000 Cost $180,000 Minus: Depreciation for 2015 (12/ year) $7,500 Depreciation for 2016 ($180,000/12) 15,000 Depreciation for 2017 (12/ year) 7,500 Total book depreciation (30,000) Book value at time of sale (150,000) Book loss on sale of Equipment 1 $(70,000) For tax: Seven-year MACRS property for which the corporation made no Sec. 179 election in the acquisition year and elected out of bonus depreciation. Equipment 2: Acquired February 16, 2016 for $624,000 For books: 12-year life; straight-line depreciation Book depreciation in 2017: $624,000/12=$52,000 For tax: Seven-year MACRS property for which the corporation made the Sec. 179 election in 2016 but elected out of bonus depreciation. Other information: Under the direct writeoff method, Jackson deducts $15,000 of bad debts for tax purposes. Jackson has a $40,000 NOL carryover and a $6,000 capital loss carryover from last year. Jackson purchased the Invest Corporation stock (less than 20% owned) on June 21, 2015, for $25,000 and sold the stock on December 22, 2017, for $55,000. Jackson Corporation has a qualified production activities income of $120,000. Required: For 2017, calculate Jackson’s tax depreciation deduction for Equipment 1 and Equipment 2, and determine the tax loss on the sale of Equipment 1. For 2017, calculate Jackson’s taxable income and tax liability. Prepare a schedule reconciling net income per books to taxable income before special deductions (Form 1120, line 28).

Answer 1

As per based on my judgement.

On the compromise some portion of the issue, you have to list the contrasts among book and assessment. Duty devaluation is 9,058 more than book deterioration so there is a negative acclimation to land at charge salary. The misfortune on the clearance of hardware was 51,045 less for charge than it was for book since more devaluation had been taken for charge. Since the assessment misfortune was less, it is a positive change. The modification for awful obligations is right (a positive change of 7,000) The NOL remainder isn't considered here in light of the fact that it is one of the unique changes after line 27. There is no modification for profits gotten on the grounds that they are salary for both book and assessment purposes. (There is an uncommon conclusion for profits got, however is taken underneath line 27).

I trust this sounds good to you since this is the best clarification I have.