Emerald Corporation, a calendar year and accrual method taxpayer, provides the following information and asks you to prepare Schedule M1 for 2021:

Net income per books (after-tax)	$268,200
Federal income tax per books	31,500
Tax-exempt interest income	15,000
Life insurance proceeds received as a result of death of corporate president	150,000
Interest on loan to purchase tax-exempt bonds	1,500
Excess of capital losses over capital gains	6,000
Premiums paid on life insurance policy on life of Emerald's president	7,800

a. Classify each item as being "Added" or "Deducted" on the M1 schedule.

	Federal income tax per books	AddedDeducted
	Tax-exempt interest income	AddedDeducted
	Life insurance proceeds received as a result of death of corporate president	AddedDeducted
	Interest on loan to purchase tax-exempt bonds	AddedDeducted
	Excess of capital losses over capital gains	AddedDeducted
	Premiums paid on life insurance policy on life of Emerald's president	AddedDeducted

b. What is the taxable income after the M1 adjustments are made? $fill in the blank 7

c. Prepare Schedule M1 for 2021.

Enter all amounts as positive numbers. If an amount is zero, enter "0".

Schedule M-1

Reconciliation of Income (Loss) per Books With Income per Return

1	Net income (loss) per books . . . . . . . . . . .	fill in the blank 8
2	Federal income tax per books . . . . . . . . . .	fill in the blank 9
3	Excess of capital losses over capital gains	fill in the blank 10
4	Income subject to tax not recorded on books this year (itemize): _ _ _ _ _ _ _ _ _
	_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _	fill in the blank 11
5	Expenses recorded on books this year not deducted on this return (itemize):
a	Depreciation . . . . . . . . . . . $ _ _ _ _ _ _ _
b	Charitable contributions . . . $ _ _ _ _ _ _ _
c	Travel and entertainment . . $ _ _ _ _ _ _ _
	Interest on loan and Life insurance proceedsLife insurance proceeds and Life insurance premiumInterest on loan & Life insurance premium	fill in the blank 13
6	Add lines 1 through 5 . . . . . . . . . . . . . . .	fill in the blank 14

7

Income recorded on books this year not included on this return (itemize):

Tax-exempt interest

$

fill in the blank 15

Interest on loan - $1,500Life insurance proceeds less life insurance premium - $142,200Life insurance proceeds - $150,000

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

fill in the blank 17

8

Deductions on this return not charged against book income this year (itemize):

a

Depreciation . . . . . . . . . . . . $ _ _ _ _ _ _ _

b

Charitable contributions . . . . $ _ _ _ _ _ _ _

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

9

Add lines 7 and 8 . . . . . . . . . . . . . . . . . . .

fill in the blank 18

10

Income (page 1, line 28)line 6 less line 9

fill in the blank 19