Question

Problem 11-8
Schedule M-1 (LO 11.4)

Caloundra Corporation has book income of $40,000. Included in the book income is $3,000 of tax-exempt interest and a $2,000 non-deductible fine. Also included in book income are $10,000 of dividends Caloundra received from a 30% owned corporation.

Using this information and Form 1120, provide the amounts that go on each line on the form.

Click here to access a blank Form 1120 and accompanying instructions.

a. Form 1120, Schedule M-1 Line 1 $ b. Form 1120, Schedule M-1, Line 10 $ c. Form 1120, Page 1, Line 28 $ d. Form 1120, Schedule C, Line 2(a) $ Form 1120, Schedule C, Line 2(c) $ e. Form 1120, Schedule C, Line 20 $ f. Form 1120, Page 1, Line 29b $ g. Form 1120, Page 1, Line 30 $

Answer 1

Answer:

The information required in on line a to g has been presented below. However, please refer to the complete Form 1120 to get complete understading of the answers.

	Question Instructions	Line according to Form 1120
a.	Form 1120, Schedule M-1 Line 1	Net income (loss) per book	$40,000
b.	Form 1120, Schedule M-1, Line 10	Income (page 1, line 28)—line 6 less line 9	$42,000
c.	Form 1120, Page 1, Line 28	Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line 11.	$42,000
d.	Form 1120, Schedule C, Line 2(a)	Dividends from 20%-or-more-owned domestic corporations (other than debt-financed stock) (a)	$10,000
	Form 1120, Schedule C, Line 2(c)	Dividends from 20%-or-more-owned domestic corporations (other than debt-financed stock) (c)	$8,000
e.	Form 1120, Schedule C, Line 20	Total special deductions. Add lines 9, 10, 11, 12, and 18	$8,000
f.	Form 1120, Page 1, Line 29b	Special deductions (Schedule C, line 20)	$8,000
g.	Form 1120, Page 1, Line 30	Taxable income. Subtract line 29c from line 28	$34,000