Emerald Corporation, a calendar year and accrual method taxpayer, provides the following information and asks you to prepare Schedule M–1 for 2014:

Net income per books (after-tax)........ $257,950

Federal income tax per books.......... 41,750

Tax-exempt interest income........... 15,000

Life insurance proceeds received as a result of death of corporate

president.................... 150,000

Interest on loan to purchase tax-exempt bonds...... 1,500

Excess of capital losses over capital gains...... 6,000

Premiums paid on life insurance policy on life of Emerald’s

president.................... 7,800