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Acme Corporation, a calendar year taxpayer, prepares its financial statements. They use the accrual method for both book and tax purposes. The company provided information

Acme Corporation, a calendar year taxpayer, prepares its financial statements. They use the accrual method for both book and tax purposes. The company provided information relating to its 2021 year-end on the bottom of the Book-to-Tax Worksheet sheet.

1. Confirm the book amount for 2021

2. Book to tax differences - which is favorable or unfavorable

3. Provide the taxable income

4. permanent or temporary

Evaluate for potential book-to-tax differencesBook

Amount
Life insurance proceeds due to CEO’s death$500,000
Revenue from sales (for both book and tax)11,000,000
Premiums paid on key-person life insurance28,000
Dividend Income (Bella Corporation, 50% ownership interest)300,000
Charitable contributions700,000
(Tax deduction is limited to ____% of taxable income before the charitable deduction).
Cost of goods sold (for both book and tax)7,500,000
Interest income earned on tax-exempt bonds75,000
Interest expense paid on loan to purchase tax-exempt bonds40,000
Rental income received and earned in 202150,000
Rental income received in 2020 but earned in 202130,000
Rental income received in 2021 but not earned by earn-end90,000
Depreciation (Tax depreciation $95,000)70,000
Lobbying fees paid to energy industry85,000
Business meal (non-restaurant meals)35,000
Entertainment expense20,000
October - December accrued bonus (book) payable March 31250,000
Increase to allowance for doubtful accounts (Bad debt write-offs $180,000)220,000
Net capital loss195,000
Warranty expense accrual (no warranty expense payouts for the year)60,000
Compensation (no single officer was paid over $1,000,000)1,500,000
Provision for income taxes (per books) -not deductible for taxable income-

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