Complete Fern Corporations Schedule M-1 (Form 1120) using the following information. Enter the appropriate amounts in the
Question:
Complete Fern Corporation’s Schedule M-1 (Form 1120) using the following information. Enter the appropriate amounts in the shaded cells below. Round answers to the nearest dollar. If no entry is necessary or the answer is zero, enter a zero (0).
Fern’s net income per books (after tax expenses) is $150,000.
The federal income tax expense per Fern's books is $24,580.
Fern received $40,000 of interest income of which $24,000 relates to municipal bonds owned.
Fern received $2,000 in prepaid rent in the current year.
Fern's books showed a $4,000 short-term capital gain distribution from a mutual fund corporation and a $5,000 loss on the sale of Retro stock that was purchased in 2015. The stock was an investment in an unrelated corporation. There were no other 2017 gains or losses and no loss carryovers from prior years.
Fern’s distributions included reimbursed employee expenses in 2017 for travel of $100,000 and business meals of $30,000. The reimbursed expense met the conditions of deductibility and were properly substantiated under an accountable plan. The reimbursement was not treated as employee compensation.
Fern expensed $7,000 in 2017 for the term life insurance premiums on the corporation officers. Fern was the policy owner and the beneficiary.
Book depreciation on computers for 2017 was $10,000. These computers, which cost $50,000, were placed in service on January 2, 2017. Tax depreciation used MACRS with the half-year convention. No election was made to expense part of the computer cost or to use a straight-line method or the alternative depreciation system.
The IRS has not yet released all of the 2017 tax forms. This form will be updated after it is released.
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Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill