Luong Corporation, a calendar year, accrual basis corporation, reported $1.75 million of net income after tax on its financial statement prepared in accordance with GAAP. The corporation's books and records reveal the following information: • Luong's federal income tax expense per books was $215,000. • Luong's book income included $25,000 of dividends received from a domestic corporation in which Luong owns a 25 percent stock interest, and $11,500 of dividends from a domestic corporation in which Luong owns a 5 percent stock interest. • Luong recognized $25,000 of capital losses this year and no capital gains. • Luong recorded $15,600 of book expense for meals not provided by a restaurant and $17,500 of book expense for entertainment costs. • Luong's depreciation expense for book purposes totaled $415,000. 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. Complete this question by entering your answers in the tabs below. Required A Required B Compute Luong's federal taxable income and regular tax liability. Note: Enter your answers in whole dollars not in millions. Taxable income Amount
Luong Corporation, a calendar year, accrual basis corporation, reported $1.75 million of net income after tax on its financial statement prepared in accordance with GAAP. The corporation's books and records reveal the following information: • Luong's federal income tax expense per books was $215,000. • Luong's book income included $25,000 of dividends received from a domestic corporation in which Luong owns a 25 percent stock interest, and $11,500 of dividends from a domestic corporation in which Luong owns a 5 percent stock interest. • Luong recognized $25,000 of capital losses this year and no capital gains. • Luong recorded $15,600 of book expense for meals not provided by a restaurant and $17,500 of book expense for entertainment costs. • Luong's depreciation expense for book purposes totaled $415,000. 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. Complete this question by entering your answers in the tabs below. Required A Required B Compute Luong's federal taxable income and regular tax liability. Note: Enter your answers in whole dollars not in millions. Taxable income Amount
Chapter17: Corporations: Introduction And Operating Rules
Section: Chapter Questions
Problem 5BCRQ
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Question
D.7.
Transcribed Image Text:Luong Corporation, a calendar year, accrual basis corporation, reported $1.75 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 $215,000.
• Luong's book income included $25,000 of dividends received from a domestic corporation in which Luong owns a 25 percent
stock interest, and $11,500 of dividends from a domestic corporation in which Luong owns a 5 percent stock interest.
• Luong recognized $25,000 of capital losses this year and no capital gains.
Luong recorded $15,600 of book expense for meals not provided by a restaurant and $17,500 of book expense for entertainment
costs.
• Luong's depreciation expense for book purposes totaled $415,000. 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.
Complete this question by entering your answers in the tabs below.
Required A Required B
Compute Luong's federal taxable income and regular tax liability.
Note: Enter your answers in whole dollars not in millions.
Taxable income
Tax liability
Amount
< Required A
Required B >
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