Schedule M-1 Adjustment

(I)/(D)/(N)

1. Reliant's disbursements included reimbursed employees' expenses in 2016 for travel of $100,000, and business meals of $30,000. The reimbursed expenses met the conditions of deductibility and were properly substantiated under an accountable plan. The reimbursement was not treated as employee compensation.

2. Reliant's books expensed $7,000 in 2016 for the term life insurance premiums on the corporate officers. Reliant was the policy owner and beneficiary.

3. Reliant's books indicated an $18,000 state franchise tax expense for 2016. Estimated state tax payments for 2016 were $15,000.

4. Book depreciation on computers for 2016 was $10,000. These computers, which cost $50,000, were placed in service on January 2, 2015. Tax depreciation used MACRS with the half-year convention. No election was made to expense part of the computer cost and Reliant elected not to use bonus depreciation.

5. For 2016, Reliant's books showed a $4,000 short-term capital gain distribution from a mutual fund corporation and a $5,000 loss on the sale of Retro stock that was purchased in 2014. The stock was an investment in an unrelated corporation. There were no other 2016 gains or losses and no loss carryovers from prior years.

6. Reliant's 2016 taxable income before the charitable contribution and the dividends received deductions was $500,000. Reliant's books expensed $15,000 in board of director authorized charitable contributions that were paid on January 5, 2017. Charitable contributions paid and expensed during 2016 were $35,000. All charitable contributions were properly substantiated. There were no net operating losses or charitable contributions that were carried forward.

Recovery Year

Property Class

3-year

5-year

7-year

1

33.33%

20.00%

14.29%

2

44.45

32.00

24.49

3

14.81

19.20

17.49

4

7.41

11.52

12.49

5

-

11.52

8.93

6

-

5.76

8.92

7

-

-

8.93

8

-

-

4.46