Phil Williams and Liz Johnson are 60% and 40% shareholders, respectively, in WJ Corporation, a C corporation. The corporation had the Income Statement during the year as follows: WJ Corporation Income Statement For the Year Ending December 31, 2017 Revenue:

Consulting Income $336,123

Interest income 11,259

Dividend income 4,580

Long-term capital loss (3,458)

Total Revenue $348,504

Expenses: Salaries and wages (non-officers) $ 47,000 Salaries and wages, owners & officers 125,000

Depreciation 41,888

Interest expense 5,220

Taxes and licenses 15,548

Meals and entertainment (100%) 15,258 Auto 5,254

Insurance (non-officer health) 6,000 Accounting and legal 2,800

Repairs 1,700

Charitable contributions 12,500

Total Expenses $278,168

Net Income before Income Tax $ 70,336

Other information for WJ Corporation:

1. WJ Corporation purchased an equipment of $36,000 on Oct.10, 2017, which was the only one plant asset purchased during the year. Accounting had depreciated as 10 years, no salvage value, used STL method. 2. Interest income $11,259, including municipal bond interest of $2,000.

3. Dividend income was qualified, received from MS Inc., WJ Corporation owns 5% of MS Inc.

4. WJ Corporation had a NOL of $4,500 carry forward from 2016.

Required:

1. Prepare Schedule M-1 for WJ Corporation. You should list the necessary calculations.

2. Calculate WJ Corporations income tax for 2017.

3. The calculation result is rounded to an integer.

1 Schedule M-1 Reconciliation of Income (Loss) per Books With Income per Return Note: The corporation may be required to file Schedule M-3. See instructions. Net income (loss) per books. 7 Income recorded on books this year 2 Federal income tax per books not included on this return (itemize): 3 Excess of capital losses over capital gains Tax-exempt interest $ 4 Income subject to tax not recorded on books this year (itemize): 8 Deductions on this return not charged 5 Expenses recorded on books this year not against book income this year (itemize): deducted on this return (itemize): a Depreciation $ Depreciation b Charitable contributions $ b Charitable contributions $ Travel and entertainment. $ 9 Add lines 7 and 8 6 Add lines 1 through 5. 10 Income (page 1, line 28) line 6 less line 9 c 1 Schedule M-1 Reconciliation of Income (Loss) per Books With Income per Return Note: The corporation may be required to file Schedule M-3. See instructions. Net income (loss) per books. 7 Income recorded on books this year 2 Federal income tax per books not included on this return (itemize): 3 Excess of capital losses over capital gains Tax-exempt interest $ 4 Income subject to tax not recorded on books this year (itemize): 8 Deductions on this return not charged 5 Expenses recorded on books this year not against book income this year (itemize): deducted on this return (itemize): a Depreciation $ Depreciation b Charitable contributions $ b Charitable contributions $ Travel and entertainment. $ 9 Add lines 7 and 8 6 Add lines 1 through 5. 10 Income (page 1, line 28) line 6 less line 9 c