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The following information for 2014 relates to Brown Corp, a calendar

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The following information for 2014 relates to Brown Corp, a
calendar year, accrual method taxpayer.
Net Income per books (after-
tax)
$175,000
Federal income tax per
books
42,250
Tax-exempt interest
income
10,250
Life insurance proceeds received as a result of death of
corporate president 102,000
Excess of capital loss over capital
gains
6,000
Premiums paid on life insurance policy on life of Browns
president 7,800
Meals & Entertainment (amount deducted on GAAP
financial statements) 6,100
Depreciation (amount deducted on GAAP financial
statements) 126,500
Depreciation (amount calculated for tax purposes under
MACRS) 139,500
Fill in:Net Income per Book:175000Add: Expenses on Book
not on Tax ReturnFederal income tax per
books42250Excess of capital loss over capital
gains6000Total Exp on Book not on Tax
Return48250Subtract: Income on Book not on Tax
ReturnTax-exempt interest income10250Life insurance
proceeds102000Total Income on Book not on Tax
Return112250Subtract: Expenses on Tax Return not on
BookDepreciationTotal Exp on Tax Return not on
Book0Net Income per Tax Return111000Hint the answer
should be 108,850

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Solution
Particulars Amount
Net Income per Book: $175,000
Add: Expenses on Book
not on Tax Return
Federal income tax per books $42,250
Excess of capital loss over capital gain
$6,000
Premiums paid on life insurance policy
$7,800
Meals & Entertainment
$3,050
________________________________________________
___
Total Exp on Book not on Tax Return $234,100
less:
Tax-exempt interest income $10,250
Life insurance proceeds
$102,000
________________________________________________

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The following information for 2014 relates to Brown Corp, a calendar year, accrual method taxpayer. Net Income per books (aftertax) $175,000 Federal income tax per books 42,250 Tax-exempt interest income 10,250 Life insurance proceeds received as a result of death of corporate president 102,000 Excess of capital loss over capital gains 6,000 Premiums paid on life insurance policy on life of Brown’s president 7,800 Meals & Entertainment (amount deducted on GAAP financial statements) 6,100 Depreciation (amount deducted on GAAP financial statements) 126,500 Depreciation (amount calculated for tax purposes under MACRS) 139,500 Fill in:Net Income per Book:175000Add: Expenses on Book not on Tax ReturnFederal income tax per books42250Excess of capital loss over capital gains6000Total Exp on Book not on Tax Return48250Subtract: Income on Book not on Tax ReturnTax-exempt interest income10250Lif ...
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