Gosling, Inc., a calendar year, accrual basis corporation, reported $756,000 net income after tax on its 2012 financial statements prepared in accordance with GAAP. The corporation's financial records reveal the following information:
• Gosling earned $478,000 from a qualified domestic production activity.
• Gosling earned $3,500 on an investment in tax-exempt municipal bonds.
• Gosling's depreciation expense per books was $72,000, and its MACRS depreciation deduction was $105,000.
• Gosling recorded $58,000 of business meals and entertainment expense for book purposes.
• Gosling's federal income tax expense per books was $440,000.
a. Compute Gosling's taxable income and regular tax liability.
b. Prepare a Schedule M-1, page 5, Form 1120, reconciling Gosling's book and taxable income.

Question

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The Answer of Gosling, Inc., a calendar year, accrual basis corporation, reported $756,000 net income after tax on its 2012 financial statements prepared in accordance with GAAP. The corporation's financial records reveal the following information:
• Gosling earned $478,000 from a qualified domestic production activity.
• Gosling earned $3,500 on an investment in tax-exempt municipal bonds.
• Gosling's depreciation expense per books was $72,000, and its MACRS depreciation deduction was $105,000.
• Gosling recorded $58,000 of business meals and entertainment expense for book purposes.
• Gosling's federal income tax expense per books was $440,000.
a. Compute Gosling's taxable income and regular tax liability.
b. Prepare a Schedule M-1, page 5, Form 1120, reconciling Gosling's book and taxable income.