O Required Information [The following information applies to the questions displayed below.] XYZ is a calendar-year corporation that began business on January 1, 2020. For the year, it reported the following information in its current-year audited income statement. Notes with important tax information are provided below. Use Exhibit 16-6. XYZ corp. Income statement For current year Revenue from sales Cost of Goods Sold Gross profit Book Income $ 40,000,000 (27,800,000) $ 13,000,000 380,81 20,8002 (4,000) 3,00 50,000 $ 13, 369, eee Other income: Income from investment in corporate stock Interest income Capital gains (losses) Gain or loss from disposition of fixed assets Miscellaneous income Gross Income Expenses Compensation Stock option compensation Advertising Repairs and Maintenance Rent Bad Debt expense Depreciation Warranty expenses Charitable donations Meals Goodwill impairment Organizational expenditures Other expenses Total expenses Income before taxes Provision for income taxes Net Income after taxes (7,500,000 4 (200,000) (1,350,000) (75,000) (22,880) (41,000, (1,400,000 (70,000) (500,000 (18,000) (30,0) 10 (44,000 11 (100, 2012 C1320, 000) 11.229.000 (400,000,13 3 1,579,000 1. XYZ owns 30 percent of the outstanding Hobble Corp. (H) stock. Hobble Corp. reported $1000,000 of income for the year. XYZ accounted for its investment in HC under the equity method, and it recorded its pro rata share of HC'S earnings for the year. HC also distributed a $200,000 dividend to XYZ 2. Of the $20,000 interest income $5,000 was from a City of Seattle bond, $7,000 was from a Tacoma City bond. $6,000 was from a fully taxable corporate bond, and the remaining $2,000 was from a money market account 3. This gain is from equipment that XY2 purchased in February and sold in December te. it does not quality as 51231 gain) 1. This includes total officer compensation of $2,500,000 (no one officer received more than $1,000,000 compensation 5 This amount is the portion of incentive stock option compensation that was expensed during the year (recipients are 6.XYZ actually wrote off $27,000 of its accounts receivable as uncollectible 7. Tax depreciation was $1,900,000 8 In the current year. XYZ did not make any actual payments on warranties it provided to customers 10. On July 1 of this year XYZ acquired the assets of another business in the process, it acquired $300,000 of goodwill. At 11. XYZ expensed all of its organizational expenditures for book purposes. XYZ expensed the maximum amount of organizational expenditures allowed for tax purposes 12. The other expenses do not contain any items with book-tax differences 13. This is an estimated tax provision (federal tax expense) for the year. Assume that XYZ is not subject to state income taxes Estimated information XYZ made four equal estimated tax payments totaling $360,000 ($90,000 per quarter. For purposes of estimated tax abilities assume XYZ was in existence in 2019 and that in 2019 is reported a tax liability of $500,000. During 2020, XYZ determined its taxable income at the end of each of the four quartets as follows Cimulative Quarter and Income clos) First 0,00 Second $ 1.100,00 Third $ 1.400 Finally, assume that XYZ is not a large corporation for purposes of estimated to calculations. Do not round Intermediate calculations. Round your answers to the nearest dollar amount) c. Complete XYZ's Schedule M-1. (Enter all amounts os positive number ere to search o G $ 3 96 5 6 7 00 9 IPS ve Problem c. Complete XYZ's Schedule M-1. (Enter all amounts as positive numbers.) 277.960 Schedule M-1: Reconciliation of Income (Loss) per Books With Income per Return 1. Net income (loss) per books 2. Federal income tax provision 3. Excess of capital losses over capital gains 4. Income subject to tax not recorded on books this year (itemize) 5. Expenses recorded on books this year not deducted on this return (itemize): a. Depreciation b. Contributions carryover c. Meals Stock option compensation (incentive stock options) Bad debt expense Warranty expense Goodwill impairment Organizational expenditures 6. Total 7. Income recorded on books this year not included on this return (itemize): Tax-exempt interest Income from investment in corporate stock 8. Deductions on this return not charged against book income this year (itemize): a. Depreciation b. Contributions carryover 9. Total $ 277.960 10. Income $ 277,960