XYZ is a calendaryear corporation that began business on January For the year, it reported the following information in its currentyear audited income statement. Notes with important tax information are provided below. Use Exhibit

XYZ corporation Income statement For current year Book Income

Revenue from sales $

Cost of Goods Sold

Gross profit $

Other income:

Income from investment in corporate stock Footnote

Interest income Footnote

Capital gains losses

Gain or loss from disposition of fixed assets Footnote

Miscellaneous income

Gross Income $

Expenses:

Compensation Footnote

Stock option compensation Footnote

Advertising

Repairs and Maintenance

Rent expense

Bad Debt expense Footnote

Depreciation Footnote

Warranty expenses to the power of

Charitable donations Footnote

Meals

Goodwill impairment Footnote

Organizational expenditures Footnote

Other expenses Footnote

Total expenses $

Income before taxes $

Provision for income taxes Footnote

Net Income after taxes $

Footnote XYZ owns of the outstanding Hobble Corporation HC stock. Hobble Corporation reported $ of income for the year. XYZ accounted for its investment in HC under the equity method, and it recorded its pro rata share of HCs earnings for the year. HC also distributed a $ dividend to XYZ For tax purposes, HC reports the actual dividend received as income, not the pro rata share of HCs earnings.

Footnote Of the $ interest income, $ was from a City of Seattle bond, $ was from a Tacoma City bond, $ was from a fully taxable corporate bond, and the remaining $ was from a money market account.

Footnote This gain is from equipment that XYZ purchased in February and sold in December ie it does not qualify as gain

Footnote This includes total officer compensation of $no one officer received more than $ compensation

Footnote This amount is the portion of incentive stock option compensation that was expensed during the year recipients are officers

Footnote XYZ actually wrote off $ of its accounts receivable as uncollectible.

Footnote Tax depreciation was $

Footnote In the current year, XYZ did not make any actual payments on warranties it provided to customers.

Footnote XYZ made $ of cash contributions to charities during the year.

Footnote On July of this year, XYZ acquired the assets of another business. In the process, it acquired $ of goodwill. At the end of the year, XYZ wrote off $ of the goodwill as impaired.

Footnote XYZ expensed all of its organizational expenditures for book purposes. XYZ expensed the maximum amount of organizational expenditures allowed for tax purposes.

Footnote The other expenses do not contain any items with booktax differences.

Footnote This is an estimated tax provision federal tax expense for the year. Assume that XYZ is not subject to state income taxes.

Estimated tax information:

XYZ made four equal estimated tax payments totaling $$ per quarter For purposes of estimated tax liabilities, assume XYZ was in existence in and that in it reported a tax liability of $ During XYZ determined its taxable income at the end of each of the first three quarters as follows:

Quarterend Cumulative taxable income loss

First $

Second $

Third $

Finally, assume that XYZ is not a large corporation for purposes of estimated tax calculations.

Note: Do not round intermediate calculations. Round your answers to the nearest dollar amount.

a Compute XYZs taxable income.

b Compute XYZ income tax liability

c Complete XYZ schedule M

d Complete XYZs Form page