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3. The following information for 2010 relates to Sparrow Corporation, a calendar year, accrual method taxpayer. Net income per books (after-tax) $ 119,738 Federal income tax expense 49,862 Tax-exempt interest income 7,500 MACRS depreciation in excess of straight-line depreciation Used for financial statement purposes 10,000 Charitable contribution in excess of taxable Income limitation 8,750 Premiums paid on life insurance policy on the president (Sparrow is beneficiary of the policy) 6,250 Interest on loan to purchase tax-exempt bonds 3,700 Based on the above information, use Schedule M-1 of Form 1120, which is available on the IRS Web site, to determine Sparrow’s taxable income for 2008.
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Thefollowinginformationfor2010relatestoSparrowCorporation,acalendaryear,accrual
methodtaxpayer.
Netincomeperbooks(aftertax)$119,738
Federalincometaxexpense49,862
Taxexemptinterestincome7,500...