The subject of this question is US Tax for CPA exam.

This is text version:

() The following two responses are required for each of the items 1 through 6. Determine the amount of Schedule M-1 adjustment. Indicate if the adjustment increases, decreases, or has no effect, on taxable income. Selections I. Increases taxable income. D. Decreases taxable income. N. Has no effect on taxable income.

1) Schedule M-1 Adjustment (ex: $10,000)

2) (I) (D) (N)

Corps disbursements included employee expenses for travel of $10,000, and business meals of $30,000.

Corps books expensed $7,000 for the term life insurance premiums on the corporate officers. Corp was the policy owner and beneficiary.

Corps books indicated an $18,000 state franchise tax expense. Estimated state tax payments were $15,000.

Book depreciation on computers was $10,000. These computers, which cost $50,000, were placed in service in prior year. Tax depreciation used MACRS with the half-year convention. No election was made to expense part of the computer cost or to use a straight-line method, and no additional first-year depreciation was taken.

Corps books showed a $4,000 long-term capital gain distribution from a mutual fund corporation and a $5,000 loss on the sale of stock. The stock was an investment in an unrelated corporation.

Corps taxable income before the charitable contribution and the dividends received deductions was $600,000. Corps books expensed $15,000 in board of director authorized charitable contributions that were paid on January 5, next year. Charitable contributions paid in current year were $35,000.

(I) The following two responses are required for each of the items 1 through 6. Determine the amount of Schedule M-1 adjustment Indicate if the adjustment increases, decreases, or has no effect, on taxable income. Selections I. Increases taxable income. D. Decreases taxable income. N. Has no effect on taxable income. Schedule M-1 Adjustment (1) (D) (N) Corp's disbursements included employee expenses for travel of $10,000, and business meals of $30,000. 1 7 U a Corp's books expensed $7,000 for the term life insurance premiums on the corporate officers. Corp was the policy owner and beneficiary. 8 2 Corp's books indicated an $18,000 state franchise tax expense. Estimated state tax payments were $15,000. 3 3 10 O 4 Book depreciation on computers was $10,000. These computers, which cost $50,000, were placed in service in prior year. Tax depreciation used MACRS with the half-year convention. No election was made to expense part of the computer cost or to use a straight-line method, and no additional first-year depreciation was taken. Corp's books showed a $4,000 long-term capital gain distribution from a mutual fund corporation and a $5,000 loss on the sale of stock. The stock was an investment in an unrelated corporation. Corp's taxable income before the charitable contribution and the dividends received deductions was $600,000. Corp's books expensed $15,000 in board of director authorized charitable contributions that were paid on January 5, next year. Charitable contributions paid in current year were $35,000. 11 O 5 12 O O 6 (I) The following two responses are required for each of the items 1 through 6. Determine the amount of Schedule M-1 adjustment Indicate if the adjustment increases, decreases, or has no effect, on taxable income. Selections I. Increases taxable income. D. Decreases taxable income. N. Has no effect on taxable income. Schedule M-1 Adjustment (1) (D) (N) Corp's disbursements included employee expenses for travel of $10,000, and business meals of $30,000. 1 7 U a Corp's books expensed $7,000 for the term life insurance premiums on the corporate officers. Corp was the policy owner and beneficiary. 8 2 Corp's books indicated an $18,000 state franchise tax expense. Estimated state tax payments were $15,000. 3 3 10 O 4 Book depreciation on computers was $10,000. These computers, which cost $50,000, were placed in service in prior year. Tax depreciation used MACRS with the half-year convention. No election was made to expense part of the computer cost or to use a straight-line method, and no additional first-year depreciation was taken. Corp's books showed a $4,000 long-term capital gain distribution from a mutual fund corporation and a $5,000 loss on the sale of stock. The stock was an investment in an unrelated corporation. Corp's taxable income before the charitable contribution and the dividends received deductions was $600,000. Corp's books expensed $15,000 in board of director authorized charitable contributions that were paid on January 5, next year. Charitable contributions paid in current year were $35,000. 11 O 5 12 O O 6