Question
23- Schedule M-1 of Form 1120 is used to reconcile financial net income with taxable income reported on the corporation's income tax return as follows:
23- Schedule M-1 of Form 1120 is used to reconcile financial net income with taxable income reported on the corporation's income tax return as follows: net income per books + additions subtractions = taxable income. Which of the following items is an addition on Schedule M-1?
a.Proceeds of life insurance paid on death of key employee.
b.Tax-exempt interest.
c.Tax depreciation in excess of book depreciation.
d.Excess of capital losses over capital gains.
25- Luis is the sole shareholder of a regular C corporation, and Eduardo owns a proprietorship. In the current year, both businesses make a profit of $80,000, and each owner withdraws $50,000 from his business. With respect to this information, which of the following statements is incorrect?
a.Eduardo's proprietorship is not required to pay income tax on $80,000.
b.Eduardo must report $80,000 of income on his return.
c.Luis must report $80,000 of income on his return.
d.Luis's corporation must pay income tax on $80,000.
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