Assume Brown corporation has net income on the financial statements of$50,000.Consider the following items.Assume westartfromthe net income on the financialstatements,and want to find out the taxable income.Specifically,adjust the net income on the financial statements with the following items.

Instructions:if you need to add an item such as$100to the book income,input100as the answer.If you need to subtract an item such as$100from the book income,input-100.If an item has no effect,write0.For example,you need to add$30of federal income tax liability to the book income.The correct answer is either30.

• Net income per books200
• Federal income tax liability30
• Interest income from the City of Flint bonds20
• Interest income from Microsoft Bonds50
• Interest paid on loan incurred to
• purchase tax-exempt bonds10
• Life insurance proceeds received as
• a result of the death of the president
• of the corporation.11
• Premiums paid on policy on the life of the
• president of the corporation12
• Excess of capital losses over capital gains13
• Excess book depreciation expense overtax depreciation expense14

Net income per books

200

Federal income tax liability

a

Interest income from the City of Flint bonds

b

Interest income from Microsoft Bonds

c

Interest paid on loan incurred to

purchase tax-exempt bonds

d

Life insurance proceeds received asa result of the death of the president of the corporation.

e

Premiums paid on policy on the life of the

president of the corporation

f

Excess of capital losses over capital gains

g

Excess book depreciation expense over tax depreciation

h

Taxable income

How would you adjust the following item from the net income on the financial statements to get to the taxable income?

(a)Federal income tax liability.the correct answer is30.

(b)Interest income from the City of Flint bonds

(c)Interest income Microsoft Bonds

(d)Interest paid on loan incurred to purchase tax-exempt bonds

(e)Life insurance proceeds received as the result of the death of the president

(f)Premiums paid on policy on the life of the president

(g)Excess of capital losses over capital gains.

(h)Excess book depreciation expense over tax depreciation expense