Question - The Loquat Corporation has book net income of $50,000 for 2014. Included in this figure are the following items, which are reported on the corporation's Schedule M-1, Reconciliation of Income (Loss) per Books with Income per Return.
Calculate Loquat Corporation's taxable income for 2014 based on the information given.
Federal income tax expense $7,500
Depreciation deducted on the books which is not deductible for tax purposes 10,000
Deduction for 50 percent of meals and entertainment expense which is not allowed for tax purposes 4,500
Deduction for a tax penalty not allowed for tax purposes 2,000
Tax-exempt interest income included in book income but not in tax income 3,000