X Y Z is a calendar-year corporation that began business on January 1,2021 . 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. 1. XYZ owns 30% of the outstanding Hobble Corporation (HC) stock. Hobble Corporation reported $1 , 000 , 000 of income for the year. X Y Z 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 X Y Z . For tax purposes, HC reports the actual dividend received as income, not the pro rata share of HC 's earnings. 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 X Y Z purchased in February and sold in December (i.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. X Y Z actually wrote off $27 , 000 of its accounts receivable as uncollectible. 7. Tax depreciation was $1 , 900 , 000 . 8. In the current year, X Y Z did not make any actual payments on warranties it provided to customers. 9. X Y Z made $500 , 000 of cash contributions to qualified charities during the year. The donations are qualified charitable contributions for purposes of determining the charitable contribution limitation. 10. On July 1 of this year X Y Z acquired the assets of another business. In the process, it acquired $300 , 000 of goodwill. At the end of the year, X Y Z wrote off $30 , 000 of the goodwill as impaired. 11. X Y Z expensed all of its organizational expenditures for book purposes. X Y Z 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 X Y Z is not subject to state income taxes. Estimated tax information: X Y Z made four equal estimated tax payments totaling $360 , 000 ( $90 , 000 per quarter). For purposes of estimated tax liabilities, assume X Y Z was in existence in 2020 and that in 2020 it reported a tax liability of $500 , 000 . During 2021 , X Y Z determined its taxable income at the end of each of the four quarters as follows: Finally, assume that X Y Z is not a large corporation for purposes of estimated tax calculations. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.) . Compute XYZ's taxable income
