Texark Inc., a calendar year taxpayer, reported $5,210,300 total income before tax on its financial statements prepared in accordance with GAAP. The corporation's records reveal the subsequent information.
Depreciation expense per books was $713,700, and MACRS depreciation was 662,000.
Texark exchanged old equipment (-0- tax basis; $44,200 book basis) for new equipment (FMV $50,000). Book gain was added in book income, although the exchange was nontaxable for tax purposes.
Texark received a $100,000 insurance reimbursement for destruction of machinery with a $29,000 tax basis and a $70,000 book basis. Texark spent $110,000 to replace the machinery before year-end.
How do I evaluate taxable income with the above information?