Gilmore\'s Ratchet Dating Service, Inc. reports net income per the books amounti

Question

Gilmore's Ratchet Dating Service, Inc. reports net income per the books amounting to $3,040,001. The corporation reports the following activity: Federal Income Tax Expense: $832,456 Excess Capital Losses: $340,982 Production Activities Deduction: $177,061 Meals & Entertainment recorded on the books: $304,082 Meals & Entertainment deducted on the tax return: $152,041 Unearned Revenue: $42,617 Tax Exempt Interest: $220,365 Charitable Contributions recorded on the books: $1,821,760 Charitable Contributions deducted on the tax return: $703,563 Life Insurance Proceeds $1,782,426 Depreciation deducted on the tax return: $2,471,000 Depreciation recorded on the books: $1,526,041 Required: Prepare the corporation's Schedule M-1 reconciliation from book income to taxable income.

Explanation / Answer

Gimlore Raichore Dating Service Inc.

Preparation of schedule M1 reconciliation from Book to taxable income

Calculation Book to Tax

           

Account Discription Amount as per books (Dr/cr) $ Amount as per Income Tax (Dr/Cr) $ Difference U.S federal Income Tax ---- 832,456 832,456 Meals & Entertainment (304,082) (152,041) (152,041) Total Permanent Adjustment 680,415 Charitable Contribution 1,821,760 703,563 Dis allowed Expenses Depriciation 2,471,000 1,526,041 (944,959) Unearned Revenue (42,617) Total Temporary Adjustment (987,276) Total M1 Adjustments (306,861)

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