Taxation of Business EntitiesCengageNOWv2 Chapter 3Q11

Problem 3-58 (LO. 5) In the current year, Pelican, Inc., incurs $50,000 of nondeductible fines and penalties. Its depreciation expense is $245,000 for financial statement purposes and $310,000 for tax purposes. How is this information reported on Schedule M-3? Click here to accessForm 1120, Schedule M-3. If an amount is zero, enter "0". Pelican, Inc., reports the fines and penalties on Schedule M-3, line 12, Part III as follows: the book expense of $50,000 is reported in ✔, the permanent difference of $ ✔ 50,000 is reported in✔, and the tax return deduction of $ ✔ 0 is reported in✔ . It also reports the depreciation on line 31, Part III as follows: book expense of $245,000 in ✔, temporary difference of $ ✔ 65,000 in✔, and tax return deduction of $ ✔ 310,000 in✔ . Feedback Check My Work Corporate taxpayers with total assets of $10 million or more are required to report much greater detail relative to differences between income (loss) reported for financial purposes and income (loss) reported for tax purposes. This expanded reconciliation of book and taxable income (loss) is reported on Schedule M-3.