Jackson Corporation prepared the following book income statement for its year ended December 31, 2022:

Sales $950,000

Minus: Cost of goods sold (450,000)

Gross profit $500,000

Plus: Dividends received on Invest Corporation stock $3,000

Gain on sale of Invest Corporation stock 30,000

Total dividends and gain 33,000

Minus: Depreciation ($7,500 + $16,700) $24,200

Bad debt expense 22,000

Other operating expenses 105,500

Loss on sale of Equipment 1 70,000

Total expenses and loss (221,700)

Net income per books before taxes $311,300

Minus: Federal income tax expense (65,100)

Net income per books $246,200

Information on equipment depreciation and sale:

Equipment 1:

Acquired March 3, 2020 for $180,000

For books: 12-year life; straight-line depreciation

Sold February 17, 2022 for $80,000

Sales price $80,000

Cost $180,000

Minus: Depreciation for 2020 ( year) $7,500

Depreciation for 2021 ($180,000/12) 15,000

Depreciation for 2022 ( year) 7,500

Total book depreciation (30,000)

Book value at time of sale (150,000)

Book loss on sale of Equipment 1 $(70,000)

For tax: Seven-year MACRS property for which the corporation made no Sec. 179

election in the acquisition year and elected out of bonus depreciation.

Equipment 2:

Acquired February 16, 2022 for $334,000

For books: 10-year life; straight-line depreciation ( year taken in first year)

Book depreciation in 2022: $334,000/10 * 0.5 = $16,700

For tax: Seven-year MACRS property for which the corporation claimed 100% bonus

depreciation for the entire cost.

Other information:

Under the direct writeoff method, Jackson deducts $15,000 of bad debts for tax purposes.

Jackson has a $40,000 NOL carryover and a $6,000 capital loss carryover, both incurred

last year.

Jackson purchased the Invest Corporation stock (less than 20% owned) on June 21,

2020, for $25,000 and sold the stock on December 21, 2022, for $55,000.

Required:

a. For 2022, calculate Jacksons tax depreciation deduction for Equipment 1 and

Equipment 2, and determine the tax loss on the sale of Equipment 1.

b. For 2022, calculate Jacksons taxable income and tax liability.

c. Prepare a schedule reconciling net income per books to taxable income before special

deductions (Form 1120, line 28).