XYZ 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.

XYZ corporation Income statement For current year	Book Income
Revenue from sales	$ 40,000,000
Cost of Goods Sold	(27,000,000)
Gross profit	$ 13,000,000
Other income:
Income from investment in corporate stock	300,0001
Interest income	20,0002
Capital gains (losses)	(4,000)
Gain or loss from disposition of fixed assets	3,0003
Miscellaneous income	50,000
Gross Income	$ 13,369,000
Expenses:
Compensation	(7,500,000)4
Stock option compensation	(200,000)5
Advertising	(1,350,000)
Repairs and Maintenance	(75,000)
Rent	(22,000)
Bad Debt expense	(41,000)6
Depreciation	(1,400,000)7
Warranty expenses	(70,000)8
Charitable donations	(500,000)9
Meals (all at restaurants)	(18,000)
Goodwill impairment	(30,000)10
Organizational expenditures	(44,000)11
Other expenses	(140,000)12
Total expenses	$ (11,390,000)
Income before taxes	$ 1,979,000
Provision for income taxes	(400,000)13
Net Income after taxes	$ 1,579,000

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 HCs 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 HCs 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 XYZ 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. 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 $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 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 booktax 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 $360,000 ($90,000 per quarter). For purposes of estimated tax liabilities, assume XYZ was in existence in 2020 and that in 2020 it reported a tax liability of $500,000. During 2021, XYZ determined its taxable income at the end of each of the four quarters as follows:

Quarter-end	Cumulative taxable income (loss)
First	$ 400,000
Second	$ 1,100,000
Third	$ 1,400,000

Finally, assume that XYZ is not a large corporation for purposes of estimated tax calculations. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.)

- Stock option is not deductible. The amount that would be deductible would be found based on when the recipient exercises the option. There is no data given about the exercise of that option. So, assume that this amount is not deductible for tax purposes.

- Organizational expenditures are $44,000. Assume that $5,000 can be deducted immediately, and $39,000 is amortized over 15 years. (In reality, the income of the company is probably too high to take the $5,000 immediate deduction, but assume that this is somehow possible for this problem.)

- Goodwill should be amortized over 15 years for tax purposes.

- Assume corporate tax rate of 21%

d. Complete XYZs Form 1120, page 1

I just need to know how to get the values on the ones marked wrong please. This will be for lines 19, 26, 31, and 36.

(4) Address change 1c 2 3 40,000,000 27.000.000 13,000,000 200,000 8.000 0 4 5 6 7 0 8 0 9 os 10 11 12 13 14 Required information 4 Schedule M-3 attached E Check if: (1) Initial return (2) Final return (3) Name change 1a Gross receipts or sales 1a 40,000,000 Returns and allowances 1b 0 c Balance. Subtract line 1b from line 1a | 2 Cost of goods sold (attach Form 1125-A) | 3 Gross profit. Subtract line 2 from line 10 | 4 Dividends and inclusions (Schedule C, line 23) Income 5 Interest 6 Gross rents 7 Gross royalties 8 Capital gain net income (attach Schedule D (Form 1120)) 9 Net gain or loss) from Form 4797, Part II. line 17 (attach Form 4797) 10 Other income (see instructionsattach statement) 11 Total income. Add lines 3 through 10 12 Compensation of officers (see instructions-attach Form 1125-E) 13 Salaries and wages (less employement credits) 14 Repairs and maintenance 15 Bad debts 10 Rents 17 Taxes and licenses 18 Interest (see instructions) Deductions 19 Charitable contributions (See 20 Depreciation from Form 4582 not claimed on Form 1125-A or elsewhere on return (attach Form 4562) instructions 21 Depletion for limitations 22 Advertising 23 Pension, profit-sharing, etc., plans deductions.) | 24 Employee benefit programs 25 Reserved for future use 28 Other deductions (attach statement) 27 Total deductions. Add lines 12 through 26 28 Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line 11 29 a Net operating loss deduction (see instructions) 29a 0 b Special deductions (Schedule C, line 24) 29b 130.000 C Add lines 29a and 29b 30 Taxable income. Subtract line 29c from line 28. see instructions 31 Total tax (Schedule J, Part I, line 11) , 32 2020 net 985 tax liability paid (Schedule J. Part II. line 12) | 33 Total payments, credits, and section 965 net tax liability (Schedule J. Part II, line 23) Refundable 34 Estimated tax penalty. See instructions. Check if Form 2220 is attached Credits, and 35 Amount owed. If line 33 is smaller than the total of lines 31, 32, and 34, enter amount owed Payments | 38 Overpayment. If line 33 is larger than the total of lines 31, 32, and 34. enter amount overpaid 37 Enter amount from line 36 you want: Credited to 2021 estimated tax Refunded 3.000 50.000 13,261.000 2.500.000 5.000.000 75.000 27.000 22.000 0 0 15 16 17 18 19 222.040 1.900.000 20 1,350.000 on 21 22 23 24 25 28 27 0 0 168,600 11,262.840 1,998.360 28 29c 30 31 32 33 130.000 1.888.360 392.358 0 360.000 0 34 35 36 32,356 0 X 37