REVIEW PROJECT – CORPORATE
(1) Your assignment is to complete the corporate M-1 for each of the problems below. This project is due per the Syllabus. You should show your work by completing the Form 1120 M-1 for each problem. FOR ELECTRONIC SUBMISSIONS IN ONLINE CLASSES, PLEASE MAKE EVERY EFFORT TO SUBMIT, IF POSSIBLE, EITHER A SINGLE PDF OR A SINGLE WORD DOCUMENT OF THE ENTIRE TAX RETURN FORM. THANK YOU.
(2) The Project is worth 50 points
(3) Check figures for M-1
Line 1: Jonathan Corp.: 386,250; Garrett Corp.: 174,100
Line 10: Jonathan Corp.: 122,000; Garrett Corp.: 265,000
Based in part on problems from leading textbooks
Jonathan Corporation, a calendar year and accrual method taxpayer, provides the following information and asks you to prepare Schedule M-1 for 2019.
Net income per books (after-tax) $386,250 Federal income tax per books 30,050
Tax-exempt interest income 5,000
Life insurance proceeds received as a
result of death of corporate president 300,000
Nondeductible penalties 2,500
Interest on loan to purchase tax-exempt bonds 1,700
Excess of capital losses over capital gains 5,300
Premiums paid on life insurance policy on life of
Eagle’s president 4,200
Excess of tax depreciation over book depreciation 3,000
The following information for 2019 relates to Garrett Corporation, a calendar year, accrual method taxpayer.
Net income per books (after-tax) $174,100 Federal income tax per books 86,600
Tax-exempt interest income 4,500
MACRS depreciation in excess of straight-line
depreciation used for financial accounting
Excess of capital loss over capital gains 9,400
Non-deductible meals and entertainment 5,500
Interest on loan to purchase tax-exempt bonds 1,100
Based on the above information, use M-1 of Form 1120, which is available on the IRS website, to determine Garrett Corporation’s taxable income for 2019.