Luong Corporation, a calendar year, accrual basis corporation, reported $1.35 million of net income after tax on its financial statements prepared in accordance with GAAP. The corporation's books and records reveal the following information: • Luong's federal income tax expense per books was $207,000. • Luong's book income included $17,000 of dividends received from a domestic corporation in which Luong owns a 25 percent stock interest, and $7,500 of dividends from a domestic corporation in which Luong owns a 5 percent stock interest. • Luong recognized $17,000 of capital losses this year and no capital gains. • Luong recorded $11,600 of book expense for meals not provided by a restaurant and $13,500 of book expense for entertainment costs. • Luong's depreciation expense for book purposes totaled $407,000. MACRS depreciation was $475,000. Required: a. Compute Luong's federal taxable income and regular tax liability. b. Prepare a Schedule M-1, page 6, Form 1120, reconciling Luong's book and taxable income.

Luong Corporation, a calendar year, accrual basis corporation, reported $1.35 million of net income after tax on its financial statements prepared in accordance with GAAP. The corporation's books and records reveal the following information: • Luong's federal income tax expense per books was $207,000. • Luong's book income included $17,000 of dividends received from a domestic corporation in which Luong owns a 25 percent stock interest, and $7,500 of dividends from a domestic corporation in which Luong owns a 5 percent stock interest. • Luong recognized $17,000 of capital losses this year and no capital gains. • Luong recorded $11,600 of book expense for meals not provided by a restaurant and $13,500 of book expense for entertainment costs. • Luong's depreciation expense for book purposes totaled $407,000. MACRS depreciation was $475,000. Required: a. Compute Luong's federal taxable income and regular tax liability. b. Prepare a Schedule M-1, page 6, Form 1120, reconciling Luong's book and taxable income.

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter17: Corporations: Introduction And Operating Rules

Section: Chapter Questions

Problem 47P

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