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Converting Corporate Book Income to Taxable Income

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A corporation has $400,000 of before-tax book income. In determining this, the corporation included $50,000 from an insurance policy paid because of the controller's death, $4,000 of premiums on other key-person life insurance policies, $10,000 interest on State of Nevada bonds, an addition of $15,000 to its bad debt reserves (bad debt expense was $20,000), and book depreciation of $34,000. The corporation's tax depreciation is $29,000. Calculate the corporation's taxable income?

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A corporation has $400,000 of before-tax book income. In determining this, the corporation included $50,000 from an insurance policy paid because of the controller's death, $4,000 of premiums on other key-person life insurance policies, $10,000 interest on State of Nevada bonds, an addition of $15,000 to its bad debt reserves (bad debt expense was $20,000), and book depreciation of $34,000. The corporation's tax depreciation is $29,000. Calculate the corporation's taxable income.

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The municipal bond interest and life insurance proceeds are not taxable. Meanwhile, the life insurance premiums, additions to bad debt reserves and book depreciation are not tax deductible. (Only direct ...

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