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:
Life insurance proceeds from CFO's death
$100,000
Revenue from sales
$3,500,000
Key person life insurance premium
$6,800
Utilities cost
$275,000
Employee benefits expense
$65,000
Intangible drilling costs
$40,000
Mining exploration and development costs
$60,000
Interest income on qualified private activity, tax-exempt bonds
$25,000
Interest paid on loan to purchase tax-exempt bonds
$25,000
Alternative Minimum NOL Deduction
$35,000
Rental income received and earned in 2013
$5,000
Rental income received but not earned in 201
$10,000
Overhead costs : Expensed in 2013
$5,000
Overhead costs expensed for financial reporting in 2012
$10,000
Charitable contributions
$315,000
Using Excel, prepare a reconciliation. Set up the Excel spreadsheet using the attached example:
NOTE *a: Line Item is each activity recorded for Tarass in 2013.
NOTE *b: "2013 Taxable Income" refers to if the line item would increase, decrease, or have no effect on Tarass's book income under GAAP. Put an "I" if the line item would increase 2013 taxable income OR "D" if the item would decrease 2013 taxable income OR "N" if the line item would neither increase nor decrease 2013 taxable income.
NOTE *c: "Adjustments OR Preferences" refers to if the line item is an adjustment or a preference. Please place an "A" if the line item is an adjustments OR a "P" if the line item is a preference OR an "N" if the line item is neither an adjustment nor a preference.
NOTE *d: "AMTI Effects" refers to if the line item would have a positive, negative, or no effect on the Alternative Minimum Taxable Income. Please place a (P) for a positive affect OR (N) for a negative effect OR an (E) if the line item could have either a positive or negative effect. If the line item is not applicable to AMTI, leave the block blank.