Hey guys, I was wondering if any of you could solve this SIM based of the AICPA.
5. Quest, Inc. is a calendar-year, accrual-basis C corporation engaged in manufacturing. Listed in column A are year 2 transactions from Quest’s financial statements and tax records. In column B, enter the amount to be reflected on Schedule M-1, Reconciliation of Income (Loss) per Books with Income per Return as an adjustment to calculate federal taxable income. Each transaction should be considered independently of the others. Enter increases to net income per books as positive, whole values and decreases to net income per books as negative, whole values. If a response is zero, enter a zero (0).
Year 2 net income per books: $632,000
Year 2 Transactions Adjustment to calculate federal taxable income
2 MACRS depreciation $224,000
Sec. 179 deduction 16,000
Book depreciation 200,000
3 Quest declared and paid a $40,000 cash dividend in June, year 2, and declared a $30,000 cash dividend in December, year 2, payable in January, year 3.
4 $30,000 of cash contributions were paid in year 2, and $10,000 of charitable contributions (approved by the board of directors) to qualifying organizations were accrued at the end of year 2 and paid on the extended tax return filing date.
5 Ordinary gain on the sale of fully depreciated office equipment to a 60% shareholder:
Gain recorded per books $8,000
Gain calculated for tax purposes 2,000
6 Gains (losses) on sales of investments in public companies recorded for book and tax purposes:
May 1 ($4,000)
June 2 7,000
Sept 4 (8,000)
There were no other asset sales during the year.
7 Ordinary gains (losses) on sales of property to a 25% shareholder recorded for book and tax purposes:
Jan 15 $6,000
May 15 (4,000)
July 16 (8,000)
Sept 25 2,000
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