Corporation Special Situations and Organization Structure
Please use the Template (at the bottom of the page) for the assignment below.
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:
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Life insurance proceeds from CFO's death
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$100,000
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Revenue from sales
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$3,500,000
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Key person life insurance premium
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$6,800
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Utilities cost
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$275,000
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Employee benefits expense
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$65,000
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Intangible drilling costs
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$40,000
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Mining exploration and development costs
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$60,000
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Interest income on qualified private activity, tax-exempt bonds
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$25,000
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Interest paid on loan to purchase tax-exempt bonds
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$25,000
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Alternative Minimum NOL Deduction
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$35,000
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Rental income received and earned in 2013
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$5,000
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Rental income received but not earned in 201
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$10,000
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Overhead costs : Expensed in 2013
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$5,000
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Overhead costs expensed for financial reporting in 2012
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$10,000
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Charitable contributions
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$315,000
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Using Excel, prepare a reconciliation. Set up the Excel spreadsheet using the example below:
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Line Item *a
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2013 Taxable Income *b:
"I" OR" "D"
OR "N"
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Adjustments OR Preferences
*c:
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AMTI EFFECTS
*d:
Positive(P)
Negative (N)
Either (E)
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Adjustments (A)
Neither(N)
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Preferences (P)
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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.
NOTE: The student might want to consult with the IRS website, downloading the instructions for Form 4626 @ https://www.irs.gov/pub/irs-pdf/i4626.pdf.
Form 4626 can be downloaded @ https://www.irs.gov/pub/irs-pdf/f4626.pdf
Template
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APPLICABLE
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2013 Taxable Income
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Adjustments OR Preferences
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AMTI AFFECTS
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Line Item
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"I" OR "D"
OR "N"
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"A" OR "P" OR "N"
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"P" OR "N" OR "E"
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Life ins. proceeds - CFO's death
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Revenue from sales
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Key-person life ins. premium
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Utilities cost
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Employee benefits expenses
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Intangible drilling costs
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Mining exploration and development costs
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Interest income on qualified private activity tax-exempt bonds
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Interest paid on loan to purchase tax exempt bonds
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Alternative Minimum NOL Deduction
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Rental income received & earned in 2013
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Rental income received but not earned in 2013
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Overhead cost - Expensed in 2013
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Overhead cost - Expensed in 2012
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Charitable contributions
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