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 Tax exempt bond interest income 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 Tax exempt bond interest expense 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 MACRS excess over straight line used for books 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 Capital losses in excess of capital gains 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 Federal income tax liability 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

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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

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

Tax exempt bond interest income.

	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.

Tax exempt bond interest-expense.

	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.

MACRS excess over straight/line used for books.

	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

Capital losses in excess of capital gains.

	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.

Federal income tax liability.

	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.