Tammy Adams and Fernando Hernandez each own 50% of Custom Designs, Inc. (CDI). On May 6, 2003, they formed CDI to provide architectural services. CDIs information is summarized as follows: CDI s business address is 2120 Adobe Drive, Las Cruces, NM 88011; its employer identification number is 11-1111111, and the principal business activity code is 541310. CDI is a cash method, calendar year taxpayer. CDIs financial statement for 2016 is show below: Income Statement Income Professional fees 739,000 Long-term capital gain 5,000 Short-term capital gain 8,000 Long-term capital loss 6,000 Dividends distributed from Gary Inc. (CDI ownership in Gary is 17%) 20,000 Interest income State bonds $18,000 Corporate bonds 24,000 42,000 Life insurance proceeds on the death of a key employee 500,000 Total income 1,308,000 Expenses Salaries-officers Tammy Adams: 190,000 Fernando Hernandez: 190,000 380,000 Salaries -clerical 61,000 Taxes (state, local , and payroll) 55,620 Advertising 17,650 Rental expenses 9,270 Repairs and maintenance 16,340 Interest expenses: On loan to purchase state bonds 10,500 Depreciation* (depreciation for tax purpose is $42,000) 35,000 Premiums on life insurance for key employees 25,000 Meals and entertainment 9,800 Total expenses 620,180 Net income before taxes 687,820 Tax 233,858 Income after tax 453,962 During 2016, CDI made estimated tax payment of $60,000 each quarter to the IRS. Prepare a Form 1120 page 1 and schedule M-1 on page 5 for CDI for tax year 2016