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The following information for 2020 relates to Sparrow Corporation, a calendar year, accrual method taxpayer: (see attached picture for questions details) --- (schedule m-1 attached) Question: Based on the attached information, use Schedule M–1 of Form 1120, to determine Sparrow’s taxable income for 2020.

The following information for 2020 relates to Sparrow Corporation, a calendar year, accrual method taxpayer: (see attached picture for questions details) --- (schedule m-1 attached) Question: Based on the attached information, use Schedule M–1 of Form 1120, to determine Sparrow’s taxable income for 2020.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The following information for 2020 relates to Sparrow Corporation, a calendar year, accrual method taxpayer:

(see attached picture for questions details) --- (schedule m-1 attached)

Question: Based on the attached information, use Schedule M–1 of Form 1120, to determine Sparrow’s taxable income for 2020.

 

 

Schedule M-1 Reconciliation of Income (Loss) per Books With Income per Return Note: The corporation may be required to file Schedule M-3. See instructions. 1 Net income (loss) per books. Income recorded on books this year 7 2 Federal income tax per books not included on this return (itemize): 3 Excess of capital losses over capital gains Tax-exempt interest 4 Income subject to tax not recorded on books this year (itemize): Deductions on this returm not charged 5 against book income this year (itemize): Expanses recorded on books thiss year not deducted on this retum (itemize): a Depreciation b Charitable contributions. $ c Travel and entertainment. $ a Depreciation b Charitable contributions S Add lines 7 and 8 6 Add lines 1 through 5. 10 Income (page 1, line 28)-line 6 less lline 9
Transcribed Image Text:Schedule M-1 Reconciliation of Income (Loss) per Books With Income per Return Note: The corporation may be required to file Schedule M-3. See instructions. 1 Net income (loss) per books. Income recorded on books this year 7 2 Federal income tax per books not included on this return (itemize): 3 Excess of capital losses over capital gains Tax-exempt interest 4 Income subject to tax not recorded on books this year (itemize): Deductions on this returm not charged 5 against book income this year (itemize): Expanses recorded on books thiss year not deducted on this retum (itemize): a Depreciation b Charitable contributions. $ c Travel and entertainment. $ a Depreciation b Charitable contributions S Add lines 7 and 8 6 Add lines 1 through 5. 10 Income (page 1, line 28)-line 6 less lline 9
Net income per books (after-tax) $205,050 Federal income tax expense per books 55,650 Tax-exempt interest income MACRS depreciation in excess of straight-line depreciation used for financial statement purposes 4,500 7,200 Excess of capital loss over capital gains 9,400 Nondeductible meals and entertainment 5,500 Interest on loan to purchase tax-exempt bonds 1,100
Transcribed Image Text:Net income per books (after-tax) $205,050 Federal income tax expense per books 55,650 Tax-exempt interest income MACRS depreciation in excess of straight-line depreciation used for financial statement purposes 4,500 7,200 Excess of capital loss over capital gains 9,400 Nondeductible meals and entertainment 5,500 Interest on loan to purchase tax-exempt bonds 1,100
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