Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Luong Corporation, a calendar year, accrual basis corporation, reported $1.20 million of net income after tax on its financial statements prepared in accordance with GAAP.
Luong Corporation, a calendar year, accrual basis corporation, reported $1.20 million of net income after tax on its financial statements prepared in accordance with GAAP. The corporations books and records reveal the following information:
- Luong's federal income tax expense per books was $204,000.
- Luong's book income included $14,000 of dividends received from a domestic corporation in which Luong owns a 25 percent stock interest, and $6,000 of dividends from a domestic corporation in which Luong owns a 5 percent stock interest.
- Luong recognized $14,000 of capital losses this year and no capital gains.
- Luong recorded $10,000 of book expense for meals not provided by a restaurant and $12,000 of book expense for entertainment costs.
- Luong's depreciation expense for book purposes totaled $404,000. MACRS depreciation was $475,000.
Required:
- Compute Luong's federal taxable income and regular tax liability.
- Prepare a Schedule M-1, page 6, Form 1120, reconciling Luongs book and taxable income.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started