Schedule M-1 Book/Tax Differences Bizzer Professional Training


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Please answer the question below
Question 3
What amounts, if any, should be included or adjusted to be reflected on Line 4 of the M-1?

Please answer by checking the appropriate box on the income statement below.

INCOME STATEMENT
Bizzer, Inc.
Gross Sales $ 1,840,000  
Cost of Goods Sold   1,540,000  

Other Income:

Dividends Received		  
 

10,000
 

1
 
Interest Income from:        
    Banks:   10,000  
    Tax-exempt state bonds:   5,000  
Life Insurance Proceeds from
    Death of Corporate Officer		   6,000  
Bad Debt Recoveries
(No tax deduction claimed)		   3,500  

Expenses:

Officer's Life Insurance Premiums
    (Corporation is beneficiary)		  
 

9,500		  
 
Compensation of Officer   50,000  
Salaries and Wages   28,000  
Repairs   800  
Taxes   10,000  
Contributions   23,500 2
Interest Paid to Purchase
Tax-exempt Bonds		   850  
Depreciation   5,200 3
Loss on Securities   3,600
 4
Net Income Before Tax $ 203,050  
Federal Income Tax Accrued   62,225
  
Net Income $ 140,825  
 
None of the numbers seem to apply.
 1. Dividends from 4% owned company. (Dividend Received Deduction = 70%)
 2. $300 are lobby expenses; Charitable contributions are limited to $2,500
 3. Tax Depreciation is computed to be $6,200
 4. The $3,600 Loss is a Net Long-term Capital Loss for the year.

 

 

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