Corporation Special Situations and Organization Structure

Tarass Inc. is an accrual-method calendar-year corporation. Tarass, Inc. did not qualify for the domestic production
activities deduction. The following information has been provided about the activities occurring in 2013:

Reported on the financial statement - income after taxes $2,585,000

Life insurance proceeds from CFO's death $100,000

Revenue from sales $3,500,000

Key-person life insurance policies premium $15,000

Cost of goods sold (reported on book) $275,000

MACRS depreciation $65,000

Book depreciation $440,000

AMT depreciation $60,000

Interest income on private activity tax-exempt bonds $25,000

Interest paid on loan to purchase tax-exempt bonds $25,000

Net capital loss $35,000

Rental income received and earned in 2013 $5,000

Rental income received in 2012 but earned in 2013 $10,000

Rental income received in 2013 but not earned $5,000

Overhead costs expensed for financial reporting but are included in ending inventory for tax purposes under 263A $45,000

Overhead costs expensed for financial reporting in 2012 but included in 2012 ending inventory. All 2012 ending inventory was sold in 2013. $0

Charitable contributions $315,000

Federal income tax expense reported on financial statements $350,000

Using the information provided, complete the following tasks:

1. Using Excel, prepare a reconciliation of book income and tax income. Set up the Excel spreadsheet using the example below:

2. Calculate Tarass Inc.'s tax liability for 2013. The calculation must be shown to receive full credit.

3. Calculate Tarass Inc.'s alternate minimum tax for 2013, if any applies. The calculation must be shown to receive full credit.