Prepare an M-1 reconciliation (what is taxable income?) for JJB Corporation usin
ID: 2438344 • Letter: P
Question
Prepare an M-1 reconciliation (what is taxable income?) for JJB Corporation using the following data:
Net income per books (after tax) 100,000 Federal income tax per books 30,000 Excess of capital losses over capital gains 15,000 Dividend income (Polk owns 1% of the paying corporation) 20,000 Nondeductible penalties 7,000 Marketing expense 16,000 Meals and Entertainment expense (total amount) 24,000 Tax-exempt interest income (private activity bond) 11,000 Excess of tax (MACRS) deprecation over book (GAAP) depreciation 35,000 Domestic Production Activities Deduction 25,000Explanation / Answer
Ans.
CALCULATION OF TAXABLE INCOME OF JJB CORPORATION
Net income per books (after tax) $100,000 Add:- Item that decreased net income but did note affect taxable income Federal income tax per books $30,000 Excess of capital losses over capital gains $15,000 Nondeductible penalties $7,000 Marketing Expenses $16,000 Meals and Entertainment expenses $24,000 Domestic Production Activities Deduction $25,000 Subtotal $217,000 Less:- Items that increased net income per books but did not affect taxable income Dividend Income -$20,000 Tax-exempt intrest income (private activity bond) -$11,000 Excess of tax (MACRS) Deprication over book (GAAP) deprication -$35,000 Taxable Income $151,000