Falcon Corporation, a service business, has the following income and expenses for financial accounting (book) purposes. You are to calculate their taxable income for the year. (Not line 28 but line 30) There may be some computations involved.

Starting with the Net income per books below, indicate any book to tax difference Falcon Corporation has. Clearly indicate if this should be add or (subtracted) to net income per books. Then, add/subtract your difference to Net Income per books and state what your Taxable income will be. Answers must be clearly labeled.

For example, simply Premiums on officers life insurance $10,000 would be acceptable as it indicates that it is not allowed as a deduction and must beaded back to net income to reach taxable income. (That is for illustration purposes and not one of your adjustments.)

Gross receipts $ 400,000

Dividends (50% owned companies) 40,000

Municipal bond interest 2,000

Net capital loss (22,000)

Total Income 420,000

Salaries 240,000

Business meals 8,000

Rent expense 35,000

Charitable contributions 25,000

Penalties for late filing 1,000

Telephone expense 11,000

Total expenses 320,000

Income before taxes 100,000

Federal income tax provision (expense) 21,000

Net income per books $ 79,000

Indicate your answers, start with Net Income per books