8.
EFG, a calendar year, accrual basis corporation, reported $479,900 net income after tax on its financial statements prepared in accordance with GAAP. The corporation's financial records reveal the following information: . EFG earned $10,700 on an investment in tax-exempt municipal bonds. EFG's allowance for bad debts as of January 1 was $21,000. Write-offs for the year totaled $4,400, while the addition to the allowance was $3,700. The allowance as of December 31 was $20,300. On August 7, EFG paid a $6,000 fine to a municipal government for a violation of a local zoning ordinance. EFG's depreciation expense per books was $44,200, and its MACRS depreciation deduction was $31,000. This is EFG's second taxable year. In its first taxable year, it recognized an $8,800 net capital loss. This year, it recognized a $31,000 Section 1231 gain on the sale of equipment. This was EFG's only disposition of noninventory assets. In its first taxable year, EFG capitalized $6,900 organizational costs for tax purposes and elected to amortize the costs over 180 months. For book purposes, it expensed the costs. EFG's federal income tax expense per books was $151,000. Required: a. Compute EFG's taxable income and regular tax. b. Prepare a Schedule M-1, page 6, Form 1120, reconciling EFG's book and taxable income. Complete this question by entering your answers in the tabs below. Required A Required B Compute EFG's taxable income and regular tax. (Do not round any intermediate division. Round your final answers to the nearest whole dollar amount. Enter your answers in whole dollars not in millions.) Amount Taxable income Regular tax EFG, a calendar year, accrual basis corporation, reported $479,900 net income after tax on its financial statements prepared in accordance with GAAP. The corporation's financial records reveal the following information: . EFG earned $10,700 on an investment in tax-exempt municipal bonds. EFG's allowance for bad debts as of January 1 was $21,000. Write-offs for the year totaled $4,400, while the addition to the allowance was $3,700. The allowance as of December 31 was $20,300. On August 7, EFG paid a $6,000 fine to a municipal government for a violation of a local zoning ordinance. EFG's depreciation expense per books was $44,200, and its MACRS depreciation deduction was $31,000. This is EFG's second taxable year. In its first taxable year, it recognized an $8,800 net capital loss. This year, it recognized a $31,000 Section 1231 gain on the sale of equipment. This was EFG's only disposition of noninventory assets. In its first taxable year, EFG capitalized $6,900 organizational costs for tax purposes and elected to amortize the costs over 180 months. For book purposes, it expensed the costs. EFG's federal income tax expense per books was $151,000. Required: a. Compute EFG's taxable income and regular tax. b. Prepare a Schedule M-1, page 6, Form 1120, reconciling EFG's book and taxable income. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a Schedule M-1, page 6, Form 1120, reconciling EFG's book and taxable income. (Any Expenses (Line 5) and Deductions (Line 8) that are not included under Depreciation, Charitable Contributions, and Travel and Entertainment should be combined in the corresponding line item "Other". Enter all amounts as positive. Enter your answers in whole dollars not in millions. Do not round any intermediate division.) Show less Schedule M-1 Reconciliation of Income (Loss) per Books With Income per Return Note: The corporation may be required to file Schedule M-3. See instructions. 1 Net income (loss) per books Income recorded on books this year not included on 2 Federal income tax per books this return (itemize): 3 Excess of capital losses over capital gains Tax-exempt interest 4 Income subject to tax not recorded on books this year (itemize): 0 0 5 Expenses recorded on books this year not deducted on 8 Deductions on this return not charged against book this return (itemize): income this year (itemize): a Depreciation a Depreciation b Charitable contributions b Charitable contributions C Travel and entertainment c Other (include all items) 0 d Other (include all items) 09 Add lines 7 and 8 0 6 Add lines 1 through 5 0 10 Income (page 1, line 28) - line 6 less line 9 THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS 1000 nonn LIH
