Western Corporation, a calendar year, accrual basis corporation, reported $500,0

Question

Western Corporation, a calendar year, accrual basis corporation, reported $500,000 of net income after tax on its 2018 financial statements prepared in accordance with GAAP. Use Corporate tax rate schedule. (Enter your answers in whole dollars not in millions.)

The corporation’s books and records reveal the following information:

Western’s book income included $15,000 of dividends, received from a domestic corporation in which Western owns less than 1 percent of the outstanding stock.

Western’s depreciation expense per books was $55,000, and its MACRS depreciation was $70,000.

Western earned $5,000 of interest from municipal bonds and $6,000 of interest from corporate bonds.

Western’s capital losses exceeded its capital gains by $2,000.

Western’s federal income tax expense per books was $103,000.

*Compute Western’s federal taxable income and regular tax liability.

*Prepare a Schedule M-1, page 5, Form 1120, reconciling Western’s book and taxable income.

Page 11-9 If taxable income is: Not over $50,000 Over $50,000 but not over $75,000 Over $75,000 but not over $100,000 Over $100,000 but not over $335,000 Over $335,000 but not over $10,000,000 Over $10,000,000 but not over $15,000,000 Over $15,000,000 but not over $18,333,333 Over $18,333,333 The tax is: 15% of taxable income $7,500 + 25% of the excess over $50,000 $13,750 + 34% of the excess over $75,000 $22,250 + 39% of the excess over $100,000 $113,900 + 34% of the excess over $335,000 $3,400,000 + 35% of the excess over $10,000,000 $5,150,000 + 38% of the excess over $15,000,000 $6,416,667 + 35% of the excess over $18,333,333

Explanation / Answer

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Let me help you with this questin where we have to reconcile the Income as per the books with Income as per the Income tax return.

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Reconciliation of Income as per Books with Income as per Return

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