I need help adjusting to tax balances for future work on tax return.

The company uses the cash method of accounting and the calendar year for reporting.

The company claimed $7,119 depreciation for book purposes, but $10,619 for tax purposes (under a MACRS methodology).Assume none of the depreciation creates a tax preference or adjustment for AMT purposes.The company is NOT a personal holding company.

All loan borrowings were used exclusively for acquisition of equipment, consequently, all interest is considered business interest.

Compensation was paid to each owner as indicated in the cash disbursements section. There was no distribution of any non-cash property.

The equipment loan is nonrecourse debt to the owners.

The 3 shareholders contributed their funds in exchange for common stock of the corporation in the following amounts:

oOwner 1 contributed $24,000 for 50% ownership interest

oOwner 2 contributed $14,400 for a 30% ownership interest

oOwner 3 contributed $9,600 for a 20% ownership interest

None of the shareholders sold any portion of their ownership interests during the year.

The shareholders were paid dividends from the profits of the company in 2018 as follows:

oOwner 1 - $45,000

oOwner 2 - $27,000

oOwner 3 - $18,000

The company has no available tax credits and is not subject to AMT.

The company's operations are entirely restricted to the local geographic area in Virginia.All owners are U.S. citizens.The company had no foreign operations, no foreign bank accounts, and no interest in any foreign trusts or other corporations.The company is not publicly traded.

The company's marketable securities represent small investments (<1%) in a number of publicly traded companies and mutual funds.

The company sold its holdings of ABC Corporation (carried as Marketable Securities on the balance sheet) on August 10 for $5,000.The corporation purchased this investment several years ago for $9,000.

(The proceeds from this sale are listed as a cash receipt below.The company has no prior-year capital gains or losses.)

The current income statement for the company reflected book net income of $107,900 AFTER book depreciation has been taken on the equipment, and the loss on the sale of ABC Corporation, and $32,000 of recorded federal income tax expense.The following information was taken from the corporation's financial statements for the current year.

Cash Receipts:

Fees collected$746,000

Taxable qualified dividend income3,400

Taxable business interest income2,600

Tax Exempt interest income1,600

Proceeds from sale of ABC Corp. common stock$5,000

Total Receipts$758,600

Cash Disbursements:

Compensation to Owner 1$100,000

Compensation to Owner 2 and 3 ($50K each)100,000

Dividend payments to shareholders90,000

Customer Refunds8.000

Office Rent28,000

Utilities7,000

Administrative employee salaries280,000

Federal income tax payments ($8K/Qtr.)32,000

Business & Professional Licenses2,000

Cash Contribution to United Way 2,000

Business Meals (while traveling) (100%)2,600

Travel7,500

Office supplies & expense9,300

Accounting (Professional) fees8,500

Advertising5,000

Taxes (Payroll, State, Local)31,500

Business interest (on equipment loan)3,800

Principal payments on equipment loan20,000

General Liability Insurance Expense3,381

Equipment rental4,000

Total Disbursements744,581

Journal entries have been made to record regular (book) depreciation in the amount of $7,119.MACRS tax depreciation was not recorded in the financial book records.

Principle payments against the equipment loan amounted to $20,000 for the year.

The balance sheets (book basis) for the company were as follows for the current year:

AccountJanuary 1, 2018December 31, 2018

Cash$86,576$?

Tax-exempt securities (at cost)52,00052,000

Marketable Securities (at cost)120,000?

Office furniture & equipment65,00065,000

Accumulated Depreciation( 36,576)________?

Total Assets$287,000$?

Nonrecourse Equipment Loan$47,000$?

Common Stock $48,000$ 48,000

Retained Earnings$ 192,000$_______?

Total Liabilities and Equity$ 287,000$ ?