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The Loquat Corporation has book net income of $50,000 for 2014. Included in this figure are the following items, which are reported on the corporation's
The Loquat Corporation has book net income of $50,000 for 2014. Included in this figure are the following items, which are reported on the corporation's Schedule M-1, Reconciliation of Income (Loss) per Books with Income per Return.
a. Calculate Loquat Corporation's taxable income for 2014 based on the information given.
Federal income tax expense | $7,500 | |
Depreciation deducted on the books which is not deductible for tax purposes | 10,000 | |
Deduction for 50 percent of meals and entertainment expense which is not allowed for tax purposes | 4,500 | |
Deduction for a tax penalty not allowed for tax purposes | 2,000 | |
Tax-exempt interest income included in book income but not in tax income | 3,000 |
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