Use 2018-2019 United States Corporate Tax Law please and explain.

59. XYZ is a calendar-year corporation that began business on January 1, 2017. For 2018, it reported the following information in its current-year audited income statement. Notes with important tax information are provided below Required: Identify the book-to-tax adjustments for XYZ. a. Reconcile book income to taxable income and identify each book-tax difference as temporary or permanent b. Compute XYZ's income tax liability C. Complete XYZ's Schedule M-1 d. Complete XYZ's Form 1120, page 1 (use the most current form available). Ignore estimated tax penalties when completing this form e. Determine the quarters for which XYZ is subject to underpayment of estimated tax penalties (see estimated tax information below). Page 16-42 XYZ Corp. Income Statement for Current Yoar Book to Tax Book Income S 40,000,000 (27,000,000) S 13,000,000 (Dr.) Cr. Taxable Income Revenue from sales Cost of goods sold Gross profit Other Income: Income from investment in 300,000 corporate stock Interest income Capital gains (losses) Gain or loss from disposition of 20,0002 (4,000) 3,0003 fixed assets 50,000 Gross Income 13,369,000 (7,500,000) (200,000 (1,350,000) (75,000) (22,000) 41000)6 (1,400,000) (70,000) (500,000)9 (18,000) 30,000)10 Stock option compensation Repairs and maintenance Rent Bad debt expense Warranty expenses Meals Goodwill impairment Organizational expenditures Other expenses Total expenses Income before taxes Provision for income taxes Net Income after taxes 44,000)11 140,000)12 $(11,390,000) $ 1,259,00014 Notes 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 issued in 2017 that was used to fund public activities, $7,000 was from a Tacoma City bond issued in 2015, $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 (ie.. 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 S500,000 of cash contributions to qualified charities during the year 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. (In a subsequent chapter, we will learn how to compute the correct tax provision.) Assume that XYZ is not subject to state income taxes Page 16-43 Estimated Tax Information XYZ made four equal estimated tax payments totaling $480,000. For purposes of estimated tax liabilities, assume XYZ reporteda tax liability of $800,000 in 2017. During 2018, XYZ determined its taxable income at the end of each of the four quarters as follows Cumulative Taxable Quarter-End First Second Third Income (Loss) $ 350,000 1,000,000 800,000 Finally, assume that XYZ is not a large corporation for purposes of estimated tax calculations. 59. XYZ is a calendar-year corporation that began business on January 1, 2017. For 2018, it reported the following information in its current-year audited income statement. Notes with important tax information are provided below Required: Identify the book-to-tax adjustments for XYZ. a. Reconcile book income to taxable income and identify each book-tax difference as temporary or permanent b. Compute XYZ's income tax liability C. Complete XYZ's Schedule M-1 d. Complete XYZ's Form 1120, page 1 (use the most current form available). Ignore estimated tax penalties when completing this form e. Determine the quarters for which XYZ is subject to underpayment of estimated tax penalties (see estimated tax information below). Page 16-42 XYZ Corp. Income Statement for Current Yoar Book to Tax Book Income S 40,000,000 (27,000,000) S 13,000,000 (Dr.) Cr. Taxable Income Revenue from sales Cost of goods sold Gross profit Other Income: Income from investment in 300,000 corporate stock Interest income Capital gains (losses) Gain or loss from disposition of 20,0002 (4,000) 3,0003 fixed assets 50,000 Gross Income 13,369,000 (7,500,000) (200,000 (1,350,000) (75,000) (22,000) 41000)6 (1,400,000) (70,000) (500,000)9 (18,000) 30,000)10 Stock option compensation Repairs and maintenance Rent Bad debt expense Warranty expenses Meals Goodwill impairment Organizational expenditures Other expenses Total expenses Income before taxes Provision for income taxes Net Income after taxes 44,000)11 140,000)12 $(11,390,000) $ 1,259,00014 Notes 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 issued in 2017 that was used to fund public activities, $7,000 was from a Tacoma City bond issued in 2015, $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 (ie.. 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 S500,000 of cash contributions to qualified charities during the year 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. (In a subsequent chapter, we will learn how to compute the correct tax provision.) Assume that XYZ is not subject to state income taxes Page 16-43 Estimated Tax Information XYZ made four equal estimated tax payments totaling $480,000. For purposes of estimated tax liabilities, assume XYZ reporteda tax liability of $800,000 in 2017. During 2018, XYZ determined its taxable income at the end of each of the four quarters as follows Cumulative Taxable Quarter-End First Second Third Income (Loss) $ 350,000 1,000,000 800,000 Finally, assume that XYZ is not a large corporation for purposes of estimated tax calculations