• Genesis, Incorporated, is a calendar year, accrual basis corporation. The business reported $852,000 net income after tax on its financial statements prepared in accordance with GAAP. The corporation's financial records also show the following information:
  • Genesis earned $7,500 on an investment in tax-exempt municipal bonds.
  • Genesis received an advance payment of rent this year for $30,000. This amount was not included in book income.
  • Genesis had depreciation expense per books was $73,000, and its MACRS depreciation deduction was $125,000.
  • Genesis recorded $70,000 of business meals (not provided by a restaurant) and $24,000 of entertainment expense for book purposes.
  • Genesis had federal income tax expense per books of $200,000.

a. Compute the taxable income and regular tax liability for Genesis.

b. Prepare a reconciliation between the book and taxable income for Genesis.