2 3 The Momeca City company has hired you to prepare the company's tax returns for its fiscal year ended Decem 31, 2019. You have been provided with the following information concerning the financial statements: 4 5 6 7 Revenues Expenses Income before income taxes Provision for income taxes Net Income, as per GAAP $700,000 $560,000 $140,000 $98,000 $42,000 00 10 11 Additional Information (assume accounting items have been appropriately included in GAAP net income): 12 13 14 15 16 - Amortization expense equals 20% of Momeca City's total expenses. The maximum CCA for the year is $105,000 - Net income includes a sale of land, with an original cost of $120,000 and proceeds of $150,000 - Bond interest expense includes $4,000 in bond discount amortization. - Bad debts of $6,000 - Golf Club membership dues of $3,000 - Charitable donations of $5,000 - Landscaping costs totaled $30,000 of which 60% were capitalized and 40% expensed. - Business meals and entertainment of $14,000 were included in total expenses, as well as $3,000 of personal meal costs. 17 18 19 20 21 22 Required: 23 24 25 - Calculate Momeca City's minimum net income for tax purposes. - Specify if the adjustment is an addition (+), deduction (-), or N/A. - Identify the ITA citation for each item. 26 2 3 The Momeca City company has hired you to prepare the company's tax returns for its fiscal year ended Decem 31, 2019. You have been provided with the following information concerning the financial statements: 4 5 6 7 Revenues Expenses Income before income taxes Provision for income taxes Net Income, as per GAAP $700,000 $560,000 $140,000 $98,000 $42,000 00 10 11 Additional Information (assume accounting items have been appropriately included in GAAP net income): 12 13 14 15 16 - Amortization expense equals 20% of Momeca City's total expenses. The maximum CCA for the year is $105,000 - Net income includes a sale of land, with an original cost of $120,000 and proceeds of $150,000 - Bond interest expense includes $4,000 in bond discount amortization. - Bad debts of $6,000 - Golf Club membership dues of $3,000 - Charitable donations of $5,000 - Landscaping costs totaled $30,000 of which 60% were capitalized and 40% expensed. - Business meals and entertainment of $14,000 were included in total expenses, as well as $3,000 of personal meal costs. 17 18 19 20 21 22 Required: 23 24 25 - Calculate Momeca City's minimum net income for tax purposes. - Specify if the adjustment is an addition (+), deduction (-), or N/A. - Identify the ITA citation for each item. 26