need help on Accounting question

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Question description

To prepare for Project Part 2:
 Revisit the assigned readings for Modules 4 and 5 from
your textbook.
 In addition, revisit the lessons for Module 4 and 5 that
present important points that you need to consider before
submitting Project Part 2.
Title: Tax Planning for Corporate Taxpayers
Jackson Corporation prepared the following book income
statement for its year ended December 31, 2013:
Minus: Cost of goods sold-----------
Gross profit $500,000
Dividends received on Invest
Corporation stock----------------------
Gain on sale of Invest Corporation
Total dividends and gain $33,000
Depreciation ($7,500 $52,000)---
Bad debt expense----------------------
Other operating expenses-----------
Loss on sale of Equipment 1--------
Total expenses and loss-------------- (257,000)
Net income per book before
Federal income tax expense--------
Net income per book$186,000
Information on equipment depreciation and sale:
Equipment 1:
 Acquired March 3, 2011 for $180,000
 For books: 12-year life; straight-line depreciation
 Sold February 17, 2013 for $80,000
Sales price $80,000
Cost $180,000
Depreciation for 2011 (1⁄2 year)
Depreciation for 2012
Depreciation for 2013 (1⁄2 year)
Total book depreciation (30,000)
Book value at time of sale (150,000)
Book loss on sale of Equipment 1 $70,000
 For tax: Seven-year Modified Accelerated Cost Recovery
System (MACRS) property for which the corporation made
no Sec. 179 election in the acquisition year and elected out
of bonus depreciation.
Equipment 2:
• Acquired February 16, 2012 for $624,000
• For books: 12-year life; straight-line depreciation
• Book depreciation in 2013: $624,000/12 = $52,000
• For tax: Seven-year MACRS property for which the
corporation made the Sec. 179 election in 20ation made the Sec. 179 election in 2012 but elected
out of bonus depreciation.
Other information:
 Under the direct write-off method, Jackson deducts $15,000
of bad debts for tax purposes.
 Jackson has a $40,000 Net Operating Loss (NOL) carryover
and a $6,000 capital loss carryover from last year.
 Jackson purchased the Invest Corporation stock (less than
20% owned) on June 21, 2011, for $25,000 and sold the
stock on December 23, 2013, for $55,000.
 Jackson Corporation has a qualified production activities
income of $120,000.
1. For 2013, calculate Jackson’s tax depreciation deduction for
Equipment 1 and Equipment 2, and determine the tax loss
on the sale of Equipment 1.
2. For 2013, calculate Jackson’s taxable income and tax
Prepare a schedule reconciling net income per book to
taxable income before special deductions (Form 1120, line
Submission Requirements:
Submit your answer in a Microsoft Word document, showing stepby-step
solutions for all calculations. The submission should use:
 Font: Arial; 12-point
 Line spacing: Double
 Citation: APA format

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School: University of Virginia
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