Cramer Corporation, a calendar year, accrual basis-corporation, reported $1 million of net income after tax on its
Question:
Cramer Corporation, a calendar year, accrual basis-corporation, reported $1 million of net income after tax on its financial statements prepared in accordance with GAAP. The corporation's books and records reveal the following information:
• Cramer's federal income tax expense per books was $400,000.
• Cramer's book income included $10,000 of dividends received from a domestic corporation in which Cramer owns a 25 percent stock interest, and $4,000 of dividends from a domestic corporation in which Cramer owns a 5 percent stock interest.
• Cramer recognized $10,000 of capital losses this year and no capital gains.
• Cramer recorded $8,000 of book expense for meals and entertainment costs.
• Cramer's depreciation expense for book purposes totaled $400,000. MACRS depreciation was $475,000.
a. Compute Cramer's federal taxable income and regular tax liability.
b. Prepare a Schedule M-1, page 5, Form 1120, reconciling Cramer's book and taxable income.
Financial StatementsFinancial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
Principles Of Taxation For Business And Investment Planning 2018
ISBN: 9781259713729
21st Edition
Authors: Sally Jones, Shelley C. Rhoades Catanach, Sandra R Callaghan