XYZ Is a calendar-year corporation that began business on January 1, 2023. 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. XYZ corporation Income statement For current year Book Income Revenue from sales $ 41,400.000 Cost of Goods Sold (27.945,000) Gross profit $ 13,455,000 Other income: ncome from invest ment in corporate stock 300,000 Interest income 25.6002 Capital gains (losses) 4,000) Gain or loss from disposition of fixed assets 3,0003 Miscellaneous income 50,000 Gross Income $ 13.829.600 Expenses: compensation 7.514,000)4 Stock option compensation (214,000)5 Advertising 1.364,000) Repairs and Maintenance (82.000) Rent expense 29,000) Bad Debt expense (48,000) Depreciation (1.575,000)7 Warranty expenses (84,000) Charitable donations (500,000)9 Meals (37.400) Goodwill impairment (33,500) 10 Organizational expenditures (38,000)17 Other expenses (154,000)12 Total expenses 5 (11.672.900) Income before taxes $ 2.156,700 Provision for income taxes (400,000)13 Net Income after taxes $ 1.756,700 1. XYZ owns 30% of the outstanding Hobble Corporation (HC) stock. Hobble Corporation 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. For tax purposes. HC reports the actual dividend received as Income, not the pro rata share of HC's earnings. 2. Of the $25,600 Interest Income, $6,400 was from a City of Seattle bond, $8,400 was from a Tacoma City bond, $7,400 was from a fully taxable corporate bond, and the remaining $3,400 was from a money market account. 3. This gain is from equipment that XYZ purchased in February and sold in December (1.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. XYZ actually wrote off $30,500 of its accounts receivable as uncollectible. 7. Tax depreciation was $2,075,000. 8. In the current year, XYZ did not make any actual payments on warranties it provided to customers. 9. XYZ made $500,000 of cash contributions to charities during the year 10. On July 1 of this year, XYZ acquired the assets of another business. In the process, It acquired $321,000 of goodwill. At the end of the year, XYZ wrote off $33,500 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. Assume that XYZ Is not subject to state Income taxes. Estimated tax Information: XYZ made four equal estimated tax payments totaling $400.000 ($100.000 per quarter). For purposes of estimated tax liabilities, assume XYZ was in existence in 2022 and that in 2022 it reported a tax liability of $556,000. During 2023. XYZ determined its taxable income at the end of each of the first three quarters as follows: Cumulative taxable income Quarter-end (loss) First $ 435,000 $ 1,135,000 Third $ 1,555,000 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.eI I Note: The corporation may be required to file Schedule M-3. See instructions. Met income (loss) per books Federal income tax per books Excess of capital losses over capital gains Income subject to tax not recorded on books this year (itemize): 5 Expenses recorded on books this year not deducted on this return (itemize): a2 Depreciation 500,000 1,756,700 % |7 Income recorded on books this year not 400,000 included on this return (itemize): Tax-exempt interest Deductions on this return not charged against book income this year (itemize): 1,575,000 3 Depreciation Charitable confributions 37.400 Other (itemize): b Charitable contributions & Meals 5 Other (itemize): Stock option compensation {incentive stock options) 214,000 & Bad debt expense 13,000 9 Warranty expense 84,000 & Goodwill impairment Organizational expenditures 33500 38,000 & Add lines 1 through 5 5954 900 9 Addlines 7 and & 1,575,000 53,115,600 10 Income (page 1, line 28)line & less line 9 THIS FORM |5 A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM ITSELF. DO NOT USE THIS FORM FOR TAX FILINGS OR