Complete the Tax Depreciation for 2020 column (column L) on the Depreciation Schedule tab. You ultimately need to calculate total tax depreciation for 2020 (cell L5). Complete the Adjustments columns (column C - favorable adjustments & D- unfavorable adjustments) and the Tax column (column E) on the Book Tax Worksheet tab for ABC, Inc. The first page/tab of the file contains the corporation's income and expenses per book in column B. Based on the given information, you will need to use the tax laws learned in class to determine the proper amount of gross income and deductions that the corporation will report for tax purposes. Record these amounts in column E, and record the appropriate adjustments in columns C & D. Read the footnotes carefully as they provide important information. o There are 10 book tax differences in the worksheet. This means the total number of entries you should have in columns C and D is 10. o For any item where book and tax income/deductions are the same, you should not have an entry in column C or D; leave these cells blank. F G H I J L M . A B D E 1 ABC, Inc. - 2020 Book/Tax Reconciliation Worksheet Book-Tax 2 Book. Adjustments Tax 3 Description (Dr) Cr (Dr) Fav. Cr - Unfav. (Dr) Cr 4 Revenue from sales ######### 5 Returnes and allowances (S500,000) ($500,000) 6 Cost of goods sold ######## 7 Gross profit $5,500,000 $5,500,000 8 Other income: N/A NA 9 Dividends! $50,000 $50,000 10 Corporate bond interest $50,000 11 Municipal bond interest $20,000 12 Life insurance proceeds (key person) $100,000 13 Net capital gains (loss) $100,000 14 Gross income $5,820,000 N/A N/A 15 Expenses/Deductions: NA N/A 16 Salaries (5999,000) 17 Taxes (state, local and payroll) and licenses (S600,000) 18 bonds ($7,500) 19 bonds ($5.000) ? 20 Depreciation ($11,190) **? 21 Advertising (S300,000) 200 22 Employee benefits ($60,000) 23 Meals 60 ($50,000) w 24 Entertainment ($70,000) are 25 Life insurance premiums (key person) ($21,000) 26 Federal income tax expense (8776,225) 27 DRD ######### 28 Net income per books/tax inc before NOL and $2,920,085 N/A N/A 29 NOL carryover from prior years SO 30 DRD SO 31 Net income per books/taxable income $2,920,085 N/A N/A 32 33 "Dividends received from a less-than-20% owned US Corp.; note: 100% of the dividend income is 34 included in gross income for tax purpses; the DRD is included separately in row 30 35 "This does not include federal income taxes 36 "Sce Depreciation Schedulc; you will need to calculate 2020 tax depreciation *This number is used only for illustrative purposes only as most students have not yet covered 37 accounting for income taxes. For purposes of this exercise, assume that this is the correct federal 38 Corporation has $6,250 NOL carryover 39 40 41 42 Book Tax Worksheet A Depreciation Schedule + F15 fx A B D E F G H J K L DATE ACQUIRED & COST OR PLACED IN OTHER SERVICE BASIS 1/1/18 $25,000 12/1/19 $35,000 12/1/20 $100,000 BOOKDEP. METHOD SL USEFUL LIFE (BOOK) 5 DESCRIPTION OF 1 PROPERTY 2 Computer Equipment 3 Furniture 4 Warehouse Equipment 5 TAX DEP. FOR 2020 SALVAGE VALUE (BOOK) $0 $0 $0 WAS BONUS DEPRECIATION USED FOR THIS ASSET? NO NO YES BOOK DEP. FOR 2020 ($5,000) ($5,000) ($1,190) ($11,190) TAX DEP. METHOD MACRS GDS MACRS GDS MACRS GDS RECOVERY TAX DEP. PERIOD CONVENTION (TAX) HY 5 MQ 7 N/A 7 SL SL 7 7 $0 9 10 11 12
