C10-Chp-00-Tst-4-Exm-Sol-2010-May - Corporate Return No Ans Page 1 of 5 Basic information for the first two questions about the corporate income tax

C10-Chp-00-Tst-4-Exm-Sol-2010-May - Corporate Return No Ans...

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Corporate Return 2f245b6c89c3aebc8c96f9af010742cd53dacef4.xls Page 1 of 5 No Ans Basic information for the first two questions about the corporate income tax return.In its first two years of operations a corporation had the following resultsGAAP Net IncomeYear 1Year 2Revenue$100,000 $100,000 Compensation40,000 40,000 Rent, utilities, etc.20,000 20,000 Charitable contributions7,000 1,000 Expenses67,000 61,000 Net income before tax33,000 39,000 There is no state income tax.1AThe company does not elect any accounting method on its tax return that differs from GAAP accountingOn the tax return for year 1, how much adjustment is made for charitable contributions on schedule M-1? aa. 3,000b. $4,000c. $6,000d. $7,000 2DOn the year 2 income tax return, what adjustment will be made for charitable contributions on Schedule M-1? Refer to your income tax return problem assignment.Assume that your audit reveals that an additionalinvoice for entertainment expenses (not lavish, etc.)for $10,000 was received on December 31, year 1.The account balances provided with the problem areused in preparing the income tax return, except thatyou will make an adjusting entry to record the additionalentertainment expense of $10,000.What is the amount of the adjustment you will reporton line 5( c) of Schedule M-1? 4CRefer to your income tax return problem assignment.Assume in the second year of operations (2010), the company has capital gains of $9,000. What amount of adjustment will be made on Schedule M-1 related to the capital gains on the tax return for 2010? 5BRefer to your income tax return problem assignment.Suppose you recommend that the company take the maximum amount of write-off for its equipment in 2009. Assume that overall limit on Depreciation expense is $80,000, and the client deducts depreciation of $80,000 on the income tax return for year 1.What is the amount of the adjustment on Schedule M-1 for year 1 related to depreciation? aa. 17,000b. $64,000c. $72,000d. $80,000
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  • Spring '08
  • Godfrey,H
  • Taxation in the United States, income tax return

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