7,00 Interest on loan to purchase tax-exempt bonds MACRS depreciation exceeding book depreciation 40,00 Net capital loss 8,000 Insurance premium on life of corporate officer where Alpha is the beneficiary 9,000 Excess charitable contributions carried over to next year 4,000 a. Prepare a reconciliation of Alpha's taxable income before special deductions with its book income. See Problem C:3-68 for related Form 1120, Schedule M-1. b. Prepare a tax provision reconciliation as in Step 9 of the Tax Provision Process. Assume a 21% tax rate. C:3-59 Reconciling Unappropriated Retained Earnings. White Corporation's financial accounting records disclose the following results for the period ending December 31 of the current year: Retained earnings balance on January 1 $246,500 Net income for year 259,574 Contingency reserve established on December 31 60,000 Cash dividend paid on July 23 23,000 What is White's unappropriated retained earnings balance on December 31 of the current year? Tax Reconciliation Process. Omega Corporation, a regular C corporation, presents you with the following partial book income statement for the current year: C:3-60 MacBook qualified pension and profit-sharing plans). Provide Elizabeth with information on the tax and having deferred compensation plans (e.g., savings associated with converting $3,000 of her salary into nontaxable fringe benefits. What additional costs might Omega Corporation incur if it adopts a fringe benefit plan? C:3-55 Estimated Tax Requirement. Zeta Corporation's taxable income for 2019 was $1.1 million, on which Zeta paid federal income taxes of $231,000. Zeta estimates calendar taxable income to be $2 million, on which it will owe $420,000 in federal income taxes. 2020's year a. What are Zeta's minimum quarterly estimated tax payments for 2020 to avoid an un- derpayment penalty? b. When is Zeta's 2020 tax return due? c. When are any remaining taxes due? What amount of taxes are due when Zeta files its return assuming Zeta timely pays estimated tax payments equal to the amount deter: mined in Part a? d. If Zeta obtains an extension to file, when is its tax return due? Will the extension per- mit Zeta to delay making its final tax payments? C:3-56 Filing the Tax Return and Paying the Tax Liability. Wright Corporation's taxable in- come for calendar years 2017, 2018, and 2019 was $120,000, $150,000, and $100,000, respectively. Its total tax liability for 2019 was $21,000. Wright estimates that its 2020 taxable income will be $600,000, on which it will owe federal income taxes of $126,000. Assume Wright earns its 2020 taxable income evenly throughout the year. a. What are Wright's minimum quarterly estimated tax payments for 2020 to avoid an underpayment penalty? b. When is Wright's 2020 tax return due? c. When are any remaining taxes due? What amount of taxes are due when Wright files its return assuming it timely paid estimated tax payments equal to the amount deter mined in Part a? d. How would your answer to Part a change if Wright's tax liability for 2019 had been $168,000? C:3-57 Converting Book Income to Taxable income. The following income and expense ac- counts appeared in the book accounting records of Rocket Corporation, an accrual basis aynayer for the current calendar year. lity for Year 1 and Year 2. C:3-49 Computing the Corporate Income Tax Liability. What is Beta Corporation's income tax liability assuming its taxable income is (a) $50,000, (b) $500,000, and (c) $50 million. How would your answers change if Beta were a personal service corporation? C:3-50 Computing Taxable income and Income Tax Liability. Pace Corporation reports the following results for the current year: Gross profit on sales $120,000 Long-term capital loss 10,000 Short-term capital loss 5,000 Dividends from 40%-owned domestic corporation 30,000 Operating expenses 65,000 Charitable contributions 10,000 a. What are Pace's taxable income and income tax liability b. What carrybacks and carryovers of any) are available and to what years must they be carned? 03-51 Computing Taxable income and Income Tax Libility. Roper Corporation reports the following results for the current years Gross profits on sales $80,000 Short-term capital gain 40,000 Long-term capital gain 25,000 Dividends from 25%-owned domestie corporation 19.000 9,000 NOL emryover from the preceding tax year Operating expenses 45,000 What are Roper's taxable income and income tax liability C:3-52 Controlled Groups. Which of the following groups constitute controlled groups? (Any stock not listed below is held by unrelated individuals each owning less than 1% of the outstanding stock.) For brother sister corporations, which definition applies! a. Judy owns 100% of the single classes of stock of Hor and Ice Corporations. b. Jones and Kane Corporation cach have only a single class of stock outstanding. The two controlling individual shareholders own the stock as follows: a. What is Ace's NOL for 2020? b. Assume that Ace expects 2021's taxable income to be $20,000 and 2022's taxable income to be $100,000, both before any NOL deduction in the carryover year. What NOL deductions can Ace expect to claim in 2021 and 2022? c. How would your answer to Part b change if, in addition to the 2020 NOL, Ace also had a $5,000 NOL carryover from a loss occurring before 2018? C.3-43 Business Interest and Net Operating Loss Carryovers. Delta Corporation incurs a $100,000 NOL in 2020. In 2021, the corporation reports the following items: Gross profit from operations $200,000 Operating expenses other than interest expense 120,000 Business interest expense 30,000 Even though the numbers in this problem are small, assume thar Delta does not qualify for the small business exemption from the ner business interest limitation. a. What is Delta's taxable income in 2021? b. What are Delta's carryovers to 2022? C:3-44 Ordering of Deductions. Beta Corporation reports the following results for the current year: Gross income from operations $180,000 Dividends from less-than-20%-owned domestie corporations 100,000 Operating expenses 150,000 Charitable contributions 20,000 In addition, Beta has a $10,000 NOL carryover from the preceding tax year a. What is Beta's taxable income for the current year? b. What carryovers are available to other tax years? C:3-45 Sale to a Related Party, Union Corporation sells a truck for $18,000 to Jane, who owns 70% of its stock. The truck has a $24,000 adjusted basis on the sale dare. Jane sells the truck to an unrelated party, Mike, for $28,000 two years later after claiming $5,000 in depreciation. a. What is Union's realized and recognized gain or loss on selling the truck? on selline the truck to Mike? deduction or dividends-received deduction. a. How much is Zeta's charitable contributions deduction in Year 1? In Year 2? b. What is Zeta's contribution carryover to Year 3, if any? C:3-38 Taxable Income Computation. Omega Corporation reports the following results for the current year: Gross profits on sales $120,000 Dividends from less-than-20%-owned domestic corporations 40,000 Operating expenses 100,000 Charitable contributions (cash) 11,000 a. What is Omega's charitable contributions deduction for the current year and its chari- table contributions carryover to next year, if any? b. What is Omega's taxable income for the current year? C:3-39 Dividends-Received Deduction. Theta Corporation reports the following results for the current year: Gross profits on sales $220,000 Dividends from less-than-20%-owned domestic corporations 100,000 Operating expenses 218,000 a. What is Theta's taxable income for the current year? b. How would your answer to Part a change if Theta's operating expenses are instead $234,000? c. How would your answer to Part a change if Theta's operating expenses are instead $272.000 d. How would your answers to Parts a, b, and e change if Theta received $70,000 of the dividends from a 20%-owned corporation and the remaining $30,000 from a less- than-20%-owned corporation? C:3-40 Stock Held 45 Days or Less. Bet Corporation purchased 100 shares of Gamma Corporation common stock (less than 5% of the outstanding stock) two days before the My SoulflytewaveReadex deset your Med Shelf password X E My Account Beytewave Rod X Reset your Bedshelf password platform vindos.com/ts/0/doc/1591029/s/171121260m/5545674697c2F4%2F4 PU Pearson's Federal Taxation 20 X POWERY TEG-uuwi 1231 loss from prior years. Determine the character of the gains and losses, and calculate the corporation's taxable income. C:3-34 Organizational and Start-Up Expenditures. Delta Corporation incorporates on January 7, begins business on July 10, and elects to have its initial tax year end on October 31. Delta incurs the following expenses between January and October related to its organiza tion during the current year: Date Expenditure Amount January 30 Travel to investigate potential business site $2,000 May 15 Legal expenses to draft corporate charter 2,500 May 30 Commissions to stockbroker for issuing and selling stock 4,000 May 30 Temporary directors' fees 2,500 June 1 Expense of transferring building to Delta 3,000 June 5 Accounting fees to set up corporate books 14500 June 10 Training expenses for employees 5,000 June 15 Rent expense for June 1,000 July 15 Rent expense for July 1,000 a. What alternative treatments are available for Delta's expenditures! b. What amount of organizational expenditures can Delta Corporation deduct on its first tax return for the fiscal year ending October 312 c. What amount of start-up costs can Delta Corporation deduct on its first tax return; C:3-35 Charitable Contribution of Property. Yellow Corporation donates the following prop- erty to the State University: MacBook