59. XYZ is a calendar-year corporation that began business on January 1, 2017. For 2018, t reported the following information in its current-year audited income statement. Notes with important tax information are provided below. Required: Identify the book-to-tax adjustments for XYZ a. Reconcile book income to taxable income and identify each book-tax difference as temporary or permanent b. Compute XYZ's income tax liability c. Complete XYZ's Schedule M-1 d. Complete XYZ's Form 120, page (use the most current form available). Ignore estimated tax penalties when completing this form e. Determine the quarters for which XYZ is subject to underpayment of estimated tax penalties (see estimated Page 5-42 tax information below). XYZ Corp. Income Statement for Current Year Book to Tax Adjustments Taxable (Dr.) Cr. Income Revenue from sales Cost of goods sold Gross profit Book Income S 40,000,000 (27,000,000) S 13,000,000 Other income: Income from investment in corporate stock Interest income Capital gains (losses) Gain or loss from disposition of fixed assets Miscellaneous income Gross income 300,000 20,0002 (4,000) 3,0003 50,000 S 13,369.000 Expenses Compensation Stock option compensation Advertising Repairs and maintenance Rent Bad debt expense Depreciation Warranty expenses Charitable donations Meals Goodwill impairment Organizational expenditures Other expenses Total expenses Income before taxes Provision for income taxes Net income after taxes (7,500,000)4 (200,000)5 (1,350,000) (75,000) (22,000) (41000)6 (1,400,000) (70,000)8 (500,000) (18,000) (30,000)10 (44,000)1 140,000)12 (,390,000) S 1,979,000 (720,000)13 S 1.259,00014 59. XYZ is a calendar-year corporation that began business on January 1, 2017. For 2018, t reported the following information in its current-year audited income statement. Notes with important tax information are provided below. Required: Identify the book-to-tax adjustments for XYZ a. Reconcile book income to taxable income and identify each book-tax difference as temporary or permanent b. Compute XYZ's income tax liability c. Complete XYZ's Schedule M-1 d. Complete XYZ's Form 120, page (use the most current form available). Ignore estimated tax penalties when completing this form e. Determine the quarters for which XYZ is subject to underpayment of estimated tax penalties (see estimated Page 5-42 tax information below). XYZ Corp. Income Statement for Current Year Book to Tax Adjustments Taxable (Dr.) Cr. Income Revenue from sales Cost of goods sold Gross profit Book Income S 40,000,000 (27,000,000) S 13,000,000 Other income: Income from investment in corporate stock Interest income Capital gains (losses) Gain or loss from disposition of fixed assets Miscellaneous income Gross income 300,000 20,0002 (4,000) 3,0003 50,000 S 13,369.000 Expenses Compensation Stock option compensation Advertising Repairs and maintenance Rent Bad debt expense Depreciation Warranty expenses Charitable donations Meals Goodwill impairment Organizational expenditures Other expenses Total expenses Income before taxes Provision for income taxes Net income after taxes (7,500,000)4 (200,000)5 (1,350,000) (75,000) (22,000) (41000)6 (1,400,000) (70,000)8 (500,000) (18,000) (30,000)10 (44,000)1 140,000)12 (,390,000) S 1,979,000 (720,000)13 S 1.259,00014
