Something is missing on schedule M-1.

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 (27,000,000) $ 13,000,000 300,0001 20, 0002 (4,000) 3,0003 50,000 $ 13, 369,000 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 (7,500,000) (200,000) (1,350,000) (75,000) (22,000) (41,000, (1,400,000)? (70,000) (500,000) (18,000) (30,000, 10 (44,000, 11 (140,000, 12 $11,390,000 $ 1,979,000 (400,000, 13 $ 1,579,000 Meals Goodwill impairment Organizational expenditures Other expenses Total expenses Income before taxes Provision for Income taxes Net Income after taxes Provision for income taxes Net Income after taxes (400,000) 15 $ 1,579,880 1. XYZ owns 30 percent of the outstanding Hobble Corp. (HC) stock. Hobble Corp. reported $1,000,000 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 XYZ purchased in February and sold in December (l.e., it does not qualify as $1231 gain). 4. 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 officers). 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. 9. XYZ made $500,000 of cash contributions to qualified charities during the year. XYZ did not elect to use the 25% of modified taxable income limitation to determine its charitable contribution deduction 10. On July 1 of this year XYZ acquired the assets of another business in the process, it acquired $300,000 of goodwill. At the end of the year, XYZ wrote off $30,000 of the goodwill as impaired 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 tax information: XYZ made four equal estimated tax payments totaling $360,000 ($90,000 per quarter). For purposes of estimated tax liabilities, assume XYZ was in existence in 2019 and that in 2019 it reported a tax liability of $500,000. During 2020, XYZ determined its taxable income at the end of each of the four quarters as follows: Quarter-end First Second Third Cumulative taxable income (loss) $ 400,000 $1,100,000 $ 1,400,000 Finally, assume that XYZ is not a large corporation for purposes of estimated tax calculations. (Do not round Intermediate calculations. Round your answers to the nearest dollar amount.) c. Complete XYZ's Schedule M-1. (Enter all amounts as positive numbers.) Answer is not complete. Schedule Mi Schedule M1 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 1 Net Income per DOORS 1.579.000 2 Federal income to per books 400.000 3 Excess of capital losses over tal 4000 4 Income si to tax no recorded on books this year Income recorded on books this year net included on this reum Tax-exemorest Theo Corp Stock $ 12 000 100 000 0 112.000 5 Expenses corded on books this year not decretum (emca Depreciation Charitable contbutions S Travel and entertainment S 8 Deductions on this return charged again bookcome ha yewe Depreciation Chartable con Once 500.000 277.950 9.00 500 000 teme 5 28690 Ads and 8 Add sough 5 26100 10 income ago 1, 2016 THIS FORM IS A SIMULATION OF AN OFFICIALUS. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF, DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL 612 000 1.990,00 olo d. Complete XYZ'S Form 1120, page 1 (Input all the values as positive numbers. Use 2020 tax rules regardless of year on tax form.) 1120 PG 1 Form 1120 U.S. Corporation Income Tax Return OMB No 1545-0123 2019 B Employer identification number Date corporated (middy) D Total assets instructions) (4) Address change tc Department of the Treasury For calendar year 2019 or tax year beginning 2019, ending 20 Internal Revenue Service Go to www.is govom 1120 for instructions and the latest information A Check Name 1a Consolidated return (attach Form 851) TYPE XY Corporation Une consolidated return OR Number, and most no fa PO boxe instructions 2 Personal holding to attach Sch. PH) PRINT 3 Personal service to see instructions) City or low state or province, country and or forin postal code 4 Schedule 1.3 attached E Check it (1) intiaretum licz Finn Name change Grosses of sales T 40.000.000 Returns and slowances th e Balance Subtractine Ib from ineta 2 Cost of goods Gallach orm 1125-A) 3 Cross profit Subtractie om inte 4 Dividends and cons Schedule Cine 23) Income Sest 6 Oroses 7 Gross royales Capitanet come attach Schedule Form 11201) Net gain or dos) from Form 4797 Partie 17 ach Fom 4797) 10 Other income instruction attach statement) 11 Tot income Add lines through 10 12 Compensation of courses instructions-attach Form 1125-E) 13 Salanes and Wages des loyement credits 14 Repairs and maintenance 15 Bad debits 15 Rents 17 Tas bicense 15 interesse instructions Deductions 19 Chartable contributions 10.000.000 27 000 000 13.000.000 300.000 20.000 22.000 4 S 10 13.342.000 13 14 15 16 17 18 19 Required information Deductions 19 Charitable contributions 19 (See 20 Depreciation from Form 4562 not claimed on Form 1125-A or elsewhere on return (attach Form 4562) 20 instructions 21 Depletion 21 for limitations 22 Advertising 22 on 23 Pension, profil sharing, etc. plans 23 deductions.) 24 Employee benett programs 24 25 Reserved for future se 26 Other deductions (attach statement) 25 27 Total deductions. Add lines 12 through 26 27 0 28 Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line 11 28 13,342,000 29a Net operating loss deduction (see instructions) 29a b Special deductions (Schedule C, line 24) 29b c Add lines 29 and 29 29c 0 30 Taxatie income. Subtract line 29c from line 28. see instructions 30 13,342,000 31 Total tax (Schedule J, Parti, line 11) 31 , 32 2019 net 965 tax liability paid (Schedule J, Part II, Ine 12) 32 33 Total payments, credits, and section 965 net tax liability (Schedule. Part II line 23) 33 Refundable 34 Estimated lax penalty See instructions. Check if Form 2220 is altached 34 Credits, and 35 Amount owed if line 33 is smaller than the total of lines 31, 32 and 34, enter amount owed 35 Payments 35 Overpayment fine 33 is larger than the total of lines 31, 32 and 34, enter amount overpaid 36 37 Enter amount from line 36 you want Credited to 2020 estimated tax Rended 37 Under penalties of perjury, I declare that I have examined this retum, including accompanying schedules and statements, and to the best of my knowledge and belief is true correct and complete. Declaration of prepare other than twayer) is based on all information of which preparer has any knowledge May the IRS discuss this retum with Sign the prepare shown below? See instructions Here Signature of officer Date Title Yes No Print/Type preparer's name Preparer's signature Date PTIN Paid Check itselt employed? F's name Preparer Form EIN Use Only Fm's address For Paperwork Reduction Act Notice, see separate instructions Cat No 114500 Form 1120 (2012 THIS FORMIS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF, DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL 2020 McGraw-Hill Finn Phone Estimated tax information: XYZ made four equal estimated tax payments totaling $360,000 ($90,000 per quarter). For purposes of estimated tax liabilities, assume XYZ was in existence in 2019 and that in 2019 it reported a tax liability of $500,000. During 2020, XYZ determined its taxable income at the end of each of the four quarters as follows: Quarter-end First Second Third Cumulative taxable income (loss) $ 400,000 $ 1,100,000 $1,400,000 Finally, assume that XYZ is not a large corporation for purposes of estimated tax calculations. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.) CARES Comprehensive Problem 5-65 Parte e. Determine the quarters for which XYZ is subject to underpayment of estimated tax penalties. (Round "Annualization Factor" for Fourth quarter to 2 decimal places.) Installment (1) Required cumulative (2) Estimated tax (3) Required payment (per payment based on payment under quarter) under prior annualized method current year tax year lax method liability (4) Required cumulative payment (5) Actual payments Underpayment penalty 1st quarter 2nd quarter 3rd quarter 4th quarter 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 (27,000,000) $ 13,000,000 300,0001 20, 0002 (4,000) 3,0003 50,000 $ 13, 369,000 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 (7,500,000) (200,000) (1,350,000) (75,000) (22,000) (41,000, (1,400,000)? (70,000) (500,000) (18,000) (30,000, 10 (44,000, 11 (140,000, 12 $11,390,000 $ 1,979,000 (400,000, 13 $ 1,579,000 Meals Goodwill impairment Organizational expenditures Other expenses Total expenses Income before taxes Provision for Income taxes Net Income after taxes Provision for income taxes Net Income after taxes (400,000) 15 $ 1,579,880 1. XYZ owns 30 percent of the outstanding Hobble Corp. (HC) stock. Hobble Corp. reported $1,000,000 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 XYZ purchased in February and sold in December (l.e., it does not qualify as $1231 gain). 4. 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 officers). 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. 9. XYZ made $500,000 of cash contributions to qualified charities during the year. XYZ did not elect to use the 25% of modified taxable income limitation to determine its charitable contribution deduction 10. On July 1 of this year XYZ acquired the assets of another business in the process, it acquired $300,000 of goodwill. At the end of the year, XYZ wrote off $30,000 of the goodwill as impaired 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 tax information: XYZ made four equal estimated tax payments totaling $360,000 ($90,000 per quarter). For purposes of estimated tax liabilities, assume XYZ was in existence in 2019 and that in 2019 it reported a tax liability of $500,000. During 2020, XYZ determined its taxable income at the end of each of the four quarters as follows: Quarter-end First Second Third Cumulative taxable income (loss) $ 400,000 $1,100,000 $ 1,400,000 Finally, assume that XYZ is not a large corporation for purposes of estimated tax calculations. (Do not round Intermediate calculations. Round your answers to the nearest dollar amount.) c. Complete XYZ's Schedule M-1. (Enter all amounts as positive numbers.) Answer is not complete. Schedule Mi Schedule M1 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 1 Net Income per DOORS 1.579.000 2 Federal income to per books 400.000 3 Excess of capital losses over tal 4000 4 Income si to tax no recorded on books this year Income recorded on books this year net included on this reum Tax-exemorest Theo Corp Stock $ 12 000 100 000 0 112.000 5 Expenses corded on books this year not decretum (emca Depreciation Charitable contbutions S Travel and entertainment S 8 Deductions on this return charged again bookcome ha yewe Depreciation Chartable con Once 500.000 277.950 9.00 500 000 teme 5 28690 Ads and 8 Add sough 5 26100 10 income ago 1, 2016 THIS FORM IS A SIMULATION OF AN OFFICIALUS. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF, DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL 612 000 1.990,00 olo d. Complete XYZ'S Form 1120, page 1 (Input all the values as positive numbers. Use 2020 tax rules regardless of year on tax form.) 1120 PG 1 Form 1120 U.S. Corporation Income Tax Return OMB No 1545-0123 2019 B Employer identification number Date corporated (middy) D Total assets instructions) (4) Address change tc Department of the Treasury For calendar year 2019 or tax year beginning 2019, ending 20 Internal Revenue Service Go to www.is govom 1120 for instructions and the latest information A Check Name 1a Consolidated return (attach Form 851) TYPE XY Corporation Une consolidated return OR Number, and most no fa PO boxe instructions 2 Personal holding to attach Sch. PH) PRINT 3 Personal service to see instructions) City or low state or province, country and or forin postal code 4 Schedule 1.3 attached E Check it (1) intiaretum licz Finn Name change Grosses of sales T 40.000.000 Returns and slowances th e Balance Subtractine Ib from ineta 2 Cost of goods Gallach orm 1125-A) 3 Cross profit Subtractie om inte 4 Dividends and cons Schedule Cine 23) Income Sest 6 Oroses 7 Gross royales Capitanet come attach Schedule Form 11201) Net gain or dos) from Form 4797 Partie 17 ach Fom 4797) 10 Other income instruction attach statement) 11 Tot income Add lines through 10 12 Compensation of courses instructions-attach Form 1125-E) 13 Salanes and Wages des loyement credits 14 Repairs and maintenance 15 Bad debits 15 Rents 17 Tas bicense 15 interesse instructions Deductions 19 Chartable contributions 10.000.000 27 000 000 13.000.000 300.000 20.000 22.000 4 S 10 13.342.000 13 14 15 16 17 18 19 Required information Deductions 19 Charitable contributions 19 (See 20 Depreciation from Form 4562 not claimed on Form 1125-A or elsewhere on return (attach Form 4562) 20 instructions 21 Depletion 21 for limitations 22 Advertising 22 on 23 Pension, profil sharing, etc. plans 23 deductions.) 24 Employee benett programs 24 25 Reserved for future se 26 Other deductions (attach statement) 25 27 Total deductions. Add lines 12 through 26 27 0 28 Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line 11 28 13,342,000 29a Net operating loss deduction (see instructions) 29a b Special deductions (Schedule C, line 24) 29b c Add lines 29 and 29 29c 0 30 Taxatie income. Subtract line 29c from line 28. see instructions 30 13,342,000 31 Total tax (Schedule J, Parti, line 11) 31 , 32 2019 net 965 tax liability paid (Schedule J, Part II, Ine 12) 32 33 Total payments, credits, and section 965 net tax liability (Schedule. Part II line 23) 33 Refundable 34 Estimated lax penalty See instructions. Check if Form 2220 is altached 34 Credits, and 35 Amount owed if line 33 is smaller than the total of lines 31, 32 and 34, enter amount owed 35 Payments 35 Overpayment fine 33 is larger than the total of lines 31, 32 and 34, enter amount overpaid 36 37 Enter amount from line 36 you want Credited to 2020 estimated tax Rended 37 Under penalties of perjury, I declare that I have examined this retum, including accompanying schedules and statements, and to the best of my knowledge and belief is true correct and complete. Declaration of prepare other than twayer) is based on all information of which preparer has any knowledge May the IRS discuss this retum with Sign the prepare shown below? See instructions Here Signature of officer Date Title Yes No Print/Type preparer's name Preparer's signature Date PTIN Paid Check itselt employed? F's name Preparer Form EIN Use Only Fm's address For Paperwork Reduction Act Notice, see separate instructions Cat No 114500 Form 1120 (2012 THIS FORMIS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF, DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL 2020 McGraw-Hill Finn Phone Estimated tax information: XYZ made four equal estimated tax payments totaling $360,000 ($90,000 per quarter). For purposes of estimated tax liabilities, assume XYZ was in existence in 2019 and that in 2019 it reported a tax liability of $500,000. During 2020, XYZ determined its taxable income at the end of each of the four quarters as follows: Quarter-end First Second Third Cumulative taxable income (loss) $ 400,000 $ 1,100,000 $1,400,000 Finally, assume that XYZ is not a large corporation for purposes of estimated tax calculations. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.) CARES Comprehensive Problem 5-65 Parte e. Determine the quarters for which XYZ is subject to underpayment of estimated tax penalties. (Round "Annualization Factor" for Fourth quarter to 2 decimal places.) Installment (1) Required cumulative (2) Estimated tax (3) Required payment (per payment based on payment under quarter) under prior annualized method current year tax year lax method liability (4) Required cumulative payment (5) Actual payments Underpayment penalty 1st quarter 2nd quarter 3rd quarter 4th quarter