Media Corp. is an accrual-basis, calendar-year C corporation. Its reported book income included $6,000 in municipal bond interest income. Its expenses included $1,500 of interest incurred on indebtedness used to carry municipal bonds and $8,000 in advertising expense. What is Media's net M-1 adjustment on its Form 1120, U. S. Corporation Income Tax Return, to reconcile to its taxable income?

(A) $1,500

(B) $3,500

(C) $9,500

(D) $ (4,500)

Question

Business

Edith Barrera

13 June, 22:52

Media Corp. is an accrual-basis, calendar-year C corporation. Its reported book income included $6,000 in municipal bond interest income. Its expenses included $1,500 of interest incurred on indebtedness used to carry municipal bonds and $8,000 in advertising expense. What is Media's net M-1 adjustment on its Form 1120, U. S. Corporation Income Tax Return, to reconcile to its taxable income?

(A) $1,500

(B) $3,500

(C) $9,500

(D) $ (4,500)

+3

Answers (1)

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Reynaldo Brock · Answer 1

Media's net M-1 adjustment to reconcile to its taxable income is $4500

Explanation:

Given dа ta:

Interest income = $6000

The amount of expenses on indebtedness = $1500

Advertising expenses = $8000

Media's net M-1 adjustment is calculated as

M-1 adjustment = interest income - The amount of expenses on indebtedness

M-1 adjustment = $6000 - $1500

M-1 adjustment = $4500

Media's net M-1 adjustment to reconcile to its taxable income is $4500