Western Corporation, a calendar year, accrual basis corporation, reported $500,000 of net income after tax on its financial statements prepared in accordance with GAAP. The corporation’s books and records reveal the following information:
• Western’s book income included $15,000 of dividends, received from a domestic corporation in which Western owns less than 1 percent of the outstanding stock.
• Western’s depreciation expense per books was $55,000, and its MACRS depreciation was $70,000.
• Western earned $5,000 of interest from municipal bonds and $6,000 of interest from corporate bonds.
• Western’s capital losses exceeded its capital gains by $2,000.
• Western’s federal income tax expense per books was $249,000.
a. Compute Western’s federal taxable income and regular tax liability.
b. Prepare a Schedule M-1, page 5, Form 1120, reconciling Western’s book and tax-able income.

  • CreatedNovember 03, 2015
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