Reference no: EM13974410

Heron Corporation, a calendar year, accrual basis taxpayer, provides the following information for this year and asks you to prepare Schedule M-1:

Net income per books (after-tax) .................$239,700
Taxable income ......................$195,000
Federal income tax liability ...................$59,300
Interest income from tax-exempt bonds ..............$5,000
Interest paid on loan incurred to purchase tax-exempt bonds.....$2,000
Life insurance proceeds received as a result of death of
Heron's president .....................$100,000
Premiums paid on policy on life of Heron's president ........$4,500
Excess of capital losses over capital gains ............$2,000
Retained earnings at beginning of year .............$375,000
Cash dividends paid .....................$90,000
Tax depreciation in excess of book depreciation ..........$7,500