Jackson Corporation prepared the following book income statement for its year ended December 31, 2019:

Information on equipment depreciation and sale:

Equipment 1:

? Acquired March 3. 2017 for $180,000

? For books: 12-year life; straight-line depreciation

? Sold February 17, 2019 for 580,000

? 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, 2019 for $334,000

? For books: 10-year life; straight-line depreciation (1/2 year taken in first year)

? Book depreciation in 2019: $334,000/10 x 0.5 = $16,700

? For tax: Seven-year MACRS property for which the corporation claimed 100% bonus depreciation for the entire cost. 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, both incurred last year.

? Jackson purchased the Invest Corporation stock (less than 20% owned) on June 21, 2017, for $25,000 and sold the stock on December 21, 2019, for $55,000.

Required:

a. For 2019, calculate Jackson's tax depredation deduction for Equipment 1 and Equipment 2, and determine the tax loss on the sale of Equipment 1.

b. For 2019, calculate Jackson's taxable income and tax liability.

c. Prepare a schedule reconciling net income per books to taxable income before special deductions (Form 1120, line 28).

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Sales Minus: Cost of goods sold Gross profit Plus: Dividends received on Invest Corporation stock $3,000 30,000 Gain on sale of Invest Corporation stock Total dividends and gain Minus: Depreciation ($7,500 + $16,700) Bad debt expense Other operating expenses Loss on sale of Equipment 1 Total expenses and loss Net income per books before taxes Minus: Federal income tax expense Net income per books $ 24,200 22,000 105,500 70,000 $950,000 (450,000) $500,000 33,000 (221,700) $311,300 (65,100) $246,200 Sales price Cost Minus: Depreciation for 2017 (½ year) Depreciation for 2018 ($180,000/12) Depreciation for 2019 (1½/2 year) Total book depreciation Book value at time of sale Book loss on sale of Equipment 1 $ 7,500 15,000 7,500 $180,000 (30,000) $ 80,000 (150,000) $(70,000)