Identify the book-adjustments fav. / unfav. and calculate the tax. Dividends received from a less-than-20% owned US Corp.; note: 100% of the dividend income is

Identify the book-adjustments fav. / unfav. and calculate the tax.

¹Dividends received from a less-than-20% owned US Corp.; note: 100% of the dividend income is included in gross income for tax purpses; the DRD is included separately in row 29

²Does not include any executive compensation in excess of $1,000,000

³This does not include federal income taxes

⁴See Depreciation Schedule; you will need to calculate 2020 tax depreciation

⁵This number is used only for illustrative purposes only as most students have not yet covered accounting for income taxes. For purposes of this exercise, assume that this is the correct federal income tax expense.

⁶Corporation has $5,000 NOL carryover
 

ABC, Inc. - 2020 Book/Tax Reconciliation Worksheet Book. (Dr) Cr $10,000,000 ($500,000) ($4,000,000) $5,500,000 $100,000 $500,000 $20,000 ($100,000) $6,020,000 ($3,000,000) ($600,000) ($7,500) ($5,000) ($21,905) ($300,000) ($120,000) ($50,000) ($70,000) ($21,000) ($383,165) ($4,578,570) $1,441,430 $0 SO $1,441,430 Description Revenue from sales Returnes and allowances Cost of goods sold Gross profit Other income: Dividends Municipal bond interest Corporate bond interest Net capital gains (loss) Gross income Expenses/Deductions: Salaries Taxes (state, local and payroll) and licenses Interest - loan used to purchase corporate bonds Interest - loan used to purchase municipal bonds Depreciation Advertising Employee benefits Entertainment Meals Life insurance premiums (key person) Federal income tax expenses Total expenses/deductions before NOL and DRD Net income per books/tax inc before NOL and DRD NOL carryover from prior year DRD Net income per books/taxable income Book-Tax Adjustments (Dr) Fav. Cr-Unfav. Tax (Dr) Cr $10,000,000 ($500,000) ($4,000,000) $5,500,000