For the last completed calendar year, Thomas Corporation, an accrual basis calendar year taxpayer, had net income per books of $102,750 and a taxable income of $15,750. Thomas had the following special transactions:

Life insurance proceeds on death of Corporations President $100,000

Premiums on same life insurance policy 10,000

Tax exempt bond interest 5,000

Tax exempt bond interest - expense 3,000

MACRS excess over straight/line used for books 4,000

Capital losses in excess of gains 6,000

Federal income tax liability 3,000

The answers for questions 33 through 39 are:

a. The item adds to net income for per the books to reach taxable income.

b. The item subtracts from net income per the books to reach taxable income.

c. The item has no effect on calculating from net income per the books to taxable income.

d. None of the above.

Use the above answers for each of the below items numbered to correspond to questions 33-39. (Two points each)

Life insurance proceeds on death of corporate president.

	a.	The item adds to net income for per the books to reach taxable income.
	b.	The item subtracts from net income per the books to reach taxable income.
	c.	The item has no effect on calculating from net income per the books to taxable income.
	d.	None of the above.

Premiums on same life insurance policy

	a.	The item adds to net income for per the books to reach taxable income.
	b.	The item subtracts from net income per the books to reach taxable income.
	c.	The item has no effect on calculating from net income per the books to taxable income.
	d.	None of the above.