Determine the amounts to be included on Reliant\'s current year Schedule M-1, an

ID: 2408204 • Letter: D

Question

Determine the amounts to be included on Reliant's current year Schedule M-1, and if

so, whether to add or to subtract from Reliant's book income in order to determine their taxable income:

5. Reliant's books showed a $4,000 short term capital gain, and a $2,000 capital loss.

6. Reliant's books showed federal tax expense of $200,000.

7. During the year, Reliant paid $25,000 of life insurance premiums on a policy

for its corporate officers.

8. Reliant's books indicated an $18,000 state income tax expense. Estimated

state tax payments were $15,000.

9. During the year, Reliant received a federal tax refund of $25,000 which is included

as income in their books.

10. Reliant's taxable income after the charitable contributions and the dividends

received deduction was $400,000. Charitable contributions totaled $70,000.

11. Reliant received $25,000 of municipal, tax exempt interest.

12. Reliant paid $30,000 of interest expense to purchase municipal, tax exempt bonds.

Determine the amounts to be included on Reliant's current year Schedule M-1, and if

so, whether to add or to subtract from Reliant's book income in order to determine their taxable income:

5) $2,000 subtract

6) $200,000 add

7) $25,000 add

8) 0 no effect

9) $25,000 subtract

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