Module $03$ Spreadsheet.xIsx

Problem $1-$ Schedule M$-1$ Preparation

The ABC Corporation $($a hypothetical company$)$ has book net income of $$100,000$ for the current year. This figure includes the

following items reported on the corporation's Schedule M$-1,$ Reconciliation of Income $($Loss$)$ per Books with Income per Return.

Federal income tax expense $$15,000$

Meal expenses per books not allowed for tax purposes $$6,000$

Entertainment expenses $$4,000$

Municipal bond interest $($ $$17,000)$

Calculate taxable income and show your calculations.

Problem $2$

The ABC Corporation has net income reported on its books of $$120,500.$ For the current year, the corporation had a federal income

tax expense of $$30,000,$ a net capital loss of $$8,300,$ and a tax$-$exempt interest income of $$5,300.$ The company deducted a

depreciation of $$20,000$ on its tax return and $$15,000$ on its books. Calculate the ABC Corporation's taxable income.

Problem $3$

ABC Corporation is a retail company. The corporation has accumulated earnings of $$800,000,$ and it can establish reasonable needs

for $$650,000$ of that amount. Calculate the amount of the accumulated earnings tax $($if any$)$ that the ABC Corporation is subject to

for this year.

Problem $4$

The C Corporation has accumulated earnings of $$300,000,$ and the corporation cannot establish a reasonable need for any of that

amount. Calculate the amount of accumulated earnings tax $($if any$)$ that will be imposed on C Corporation.

Problem $5$

For the last five years, Ann and Betty have owned the L Corporation $($hypothetical$)$ equally. Ann and Betty have $$70,000$ and $$60,000$

adjusted bases, respectively, in their L Corporation stock. Ann receives a $$40,000$ cash liquidating distribution in exchange for her

stock. Betty receives as a liquidating distribution a parcel of land having an $$80,000$ FMV and subject to a $$25,000$ mortgage, which

she assumes, and $$10,000$ of cash in exchange for her stock.

What are the amount and character of each shareholder's gain or loss?

What is each shareholder's basis for the property received in the liquidation?