C:3-65 Permtemp Corporation formed in 2008 and, for that year, reported the following book income statement and balance sheet, excluding the federal income tax expense, deferred tax assets, and deferred tax liabilities:
AND SO ON
Required for 2008:
a. Prepare page 1 of the 2008 Form 1120, computing the corporations NOL.
b. Determine the corporations deferred tax asset and deferred tax liability situation, and then complete the income statement and balance sheet to reflect proper GAAP accounting under ASC 740. Use the balance sheet information to prepare Schedule L of the 2008 Form 1120.
c. Prepare the 2008 Schedule M-3 for Form 1120.
d. Prepare a schedule that reconciles the corporations effective tax rate to the statutory 34% tax rate.
Check Figures for Project:
2008 - Form 1120, line 30 taxable income has a net operating loss of ($887,500). Schedule L has lines 15 and 28 of $16,920,750. Schedule M-2 has a line 8 balance at the end of the year of negative ($393,250). The problem does not tell you to do the M-2 but I want you try it. M-3 line 4a should be $negative ($393,250), Part II, line 26 negative ($14,950,000), line 30 negative ($852,500) and Part III, line 30 $2,047,500 in column (d).
2009 - Form 1120, line 30 taxable income of $1,836,760. Remember that you had a net operating loss in 2008 and you should have special deductions. Line 31 total tax should be $624,498. Schedule L should have a rollover beginning balance from the 2008 ending balance above and the 2009 ending balance should be $20,578,000. Schedule M-2 should have a line 8 number of $2,568,502. Schedule M-3 should have a line 4a of $2,961,752, Part II, line 26 of negative ($21,945,000), line 30 of $2,762,760, and Part III, line 36 of $3,617,240 in column (d).
Click here for the solution: Permtemp Corporation formed in 2008 and, for that year, reported the following book income statement and balance sheet
