Luong Corporation, a calendar year, accrual basis corporation, reported $1.65 million of net income after tax...

Transcribed Image Text:

Luong Corporation, a calendar year, accrual basis corporation, reported $1.65 million of net income after tax on its financial statements prepared in accordance with GAAP. The corporation's books and records reveal the following information: Luong's federal income tax expense per books was $213,000. Luong's book income included $23,000 of dividends received from a domestic corporation in which Luong owns a 25 percent stock interest, and $10,500 of dividends from a domestic corporation in which Luong owns a 5 percent stock interest. Luong recognized $23,000 of capital losses this year and no capital gains. Luong recorded $14,600 of book expense for meals not provided by a restaurant and $16,500 of book expense for entertainment costs. Luong's depreciation expense for book purposes totaled $413,000. MACRS depreciation was $475,000. Required: a. Compute Luong's federal taxable income and regular tax liability. b. Prepare a Schedule M-1, page 6, Form 1120, reconciling Luong's book and taxable income. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a Schedule M-1, page 6, Form 1120, reconciling Luong's book and taxable income. Note: Any Expenses (Line 5) and Deductions (Line 8) that are not included under Depreciation, Charitable Contributions, and Travel and Entertainment should be combined in the corresponding line item "Other". Enter all amounts as positive. Enter your answers in whole dollars not in millions. Schedule M-1 Reconciliation of Income (Loss) per Books With Income per Return Note: The corporation may be required to file Schedule M-3. See instructions. 1 Net income (loss) per books 2 Federal income tax per books 3 Excess of capital losses over capital gains 4 Income subject to tax not recorded on books this year (itemize): 5 Expenses recorded on books this year not deducted on this return (itemize): a Depreciation b Charitable contributions c Travel and entertainment d Other (include all items) 6 Add lines 1 through 5 Income recorded on books this year not included on this return (itemize): Tax-exempt interest 8 Deductions on this return not charged against book income this year (itemize): a Depreciation b Charitable contributions c Other (include all items) 9 Add lines 7 and 8 10 Income (page 1, line 28) - line 6 less line 9 Show less Luong Corporation, a calendar year, accrual basis corporation, reported $1.65 million of net income after tax on its financial statements prepared in accordance with GAAP. The corporation's books and records reveal the following information: Luong's federal income tax expense per books was $213,000. Luong's book income included $23,000 of dividends received from a domestic corporation in which Luong owns a 25 percent stock interest, and $10,500 of dividends from a domestic corporation in which Luong owns a 5 percent stock interest. Luong recognized $23,000 of capital losses this year and no capital gains. Luong recorded $14,600 of book expense for meals not provided by a restaurant and $16,500 of book expense for entertainment costs. Luong's depreciation expense for book purposes totaled $413,000. MACRS depreciation was $475,000. Required: a. Compute Luong's federal taxable income and regular tax liability. b. Prepare a Schedule M-1, page 6, Form 1120, reconciling Luong's book and taxable income. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a Schedule M-1, page 6, Form 1120, reconciling Luong's book and taxable income. Note: Any Expenses (Line 5) and Deductions (Line 8) that are not included under Depreciation, Charitable Contributions, and Travel and Entertainment should be combined in the corresponding line item "Other". Enter all amounts as positive. Enter your answers in whole dollars not in millions. Schedule M-1 Reconciliation of Income (Loss) per Books With Income per Return Note: The corporation may be required to file Schedule M-3. See instructions. 1 Net income (loss) per books 2 Federal income tax per books 3 Excess of capital losses over capital gains 4 Income subject to tax not recorded on books this year (itemize): 5 Expenses recorded on books this year not deducted on this return (itemize): a Depreciation b Charitable contributions c Travel and entertainment d Other (include all items) 6 Add lines 1 through 5 Income recorded on books this year not included on this return (itemize): Tax-exempt interest 8 Deductions on this return not charged against book income this year (itemize): a Depreciation b Charitable contributions c Other (include all items) 9 Add lines 7 and 8 10 Income (page 1, line 28) - line 6 less line 9 Show less