Question
Net income per books (before federal income taxes) $740,000 Federal income tax expense per books (156,912) Net income per books (after federal income taxes) $583,088
Net income per books (before federal income taxes) $740,000
Federal income tax expense per books (156,912)
Net income per books (after federal income taxes) $583,088
Tax-exempt interest income 8,500
Interest on loan to purchase tax-exempt bonds 7,500
MACRS depreciation exceeding book depreciation 44,000
Net capital loss 6,500
Insurance premium on life of corporate officer where Lambda is the beneficiary 8,200
Excess charitable contributions carried over to next year 3,800
a. Prepare a reconciliation of Lambda's taxable income before special deductions with its book income.
b. Prepare a tax provision reconciliation as in Step 9 of the Tax Provision Process. Assume a 21% tax rate.
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