XYZ is a calendar-year corporation that began business on January 1, 2012. For 2012, it reported the following information in its current year audited income statement. Notes with important tax information are provided below. XYZ corp. Income statement Book For current year Income Revenue from sales $40,000,000 Cost of Goods Sold (27,000,000) -------------------------------------------------------------------------------- Gross profit $13,000,000 Other income: Income from investment in corporate stock 300,000 (Note 1) Interest income 20,000 (Note 2) Capital gains (losses) (4,000) Gain or loss from disposition of fixed assets 3,000 (Note 3) Miscellaneous income 50,000 ------------------------------------------------------------------------------- Gross Income $13,369,000 Expenses: Compensation (7,500,000) (Note 4) Stock option compensation (200,000) (Note 5) Advertising (1,350,000) Repairs and Maintenance (75,000) Rent (22,000) Bad Debt expense (41,000) (Note 6) Depreciation (1,400,000) (Note 7) Warranty expenses (70,000) (Note 8) Charitable donations (500,000) (Note 9) Meals and entertainment (18,000) Goodwill impairment (30,000) (Note 10) Organizational expenditures (44,000) (Note 11) Other expenses (140,000) (Note 12) ------------------------------------------------------------------------------- Total expenses $(11,390,000) -------------------------------------------------------------------------------- Income before taxes $1,979,000 Provision for income taxes (720,000) (Note 13) -------------------------------------------------------------------------------- Net Income after taxes $1,259,000 (Note 14) -------------------------------------------------------------------------------- 1. XYZ owns 30 percent of the outstanding Hobble Corp. (HC) stock. Hobble Corp. reported $1,000,000 of income for the year. XYZ accounted for its investment in HC under the equity method and it recorded its pro rata share of HC's earnings for the year. HC also distributed a $200,000 dividend to XYZ. 2. Of the $20,000 interest income, $5,000 was from a City of Seattle bond (issued in 2007) that was used to fund public activities, $7,000 was from a Tacoma City bond (issued in 2008) used to fund private activities, $6,000 was from a fully taxable corporate bond, and the remaining $2,000 was from a money market account. 3. This gain is from equipment that XYZ purchased in February and sold in December (that is, it does not qualify as §1231 gain). 4. This includes total officer compensation of $2,500,000 (no one officer received more than $1,000,000 compensation). 5. This amount is the portion of incentive stock option compensation that vested during the year (recipients are officers). 6. XYZ actually wrote off $27,000 of its accounts receivable as uncollectible. 7. Regular tax depreciation was $1,900,000 and AMT (and ACE) depreciation was $1,700,000. 8. In the current year, XYZ did not make any actual payments on warranties it provided to customers. 9. XY.

1. XYZ is a calendar-year corporation that began business on
January 1, 2012. For 2012, it reported the following information
in its current year audited income statement. Notes with
important tax information are provided below.
XYZ corp.
Income statement
Book For current year Income
Revenue from sales $40,000,000
Cost of Goods Sold (27,000,000)
---------------------------------------------------------------------------
-----
Gross profit $13,000,000
Other income:
Income from investment in corporate stock 300,000 (Note 1)
Interest income 20,000 (Note 2)
Capital gains (losses) (4,000)
Gain or loss from disposition of fixed assets 3,000 (Note 3)
Miscellaneous income 50,000
---------------------------------------------------------------------------
----
Gross Income $13,369,000
Expenses:
Compensation (7,500,000) (Note 4)
Stock option compensation (200,000) (Note 5)
Advertising (1,350,000)
Repairs and Maintenance (75,000)
Rent (22,000)
Bad Debt expense (41,000) (Note 6)
Depreciation (1,400,000) (Note 7)
Warranty expenses (70,000) (Note 8)
Charitable donations (500,000) (Note 9)
Meals and entertainment (18,000)
Goodwill impairment (30,000) (Note 10)

2. Organizational expenditures (44,000) (Note 11)
Other expenses (140,000) (Note 12)
---------------------------------------------------------------------------
----
Total expenses $(11,390,000)
---------------------------------------------------------------------------
-----
Income before taxes $1,979,000
Provision for income taxes (720,000) (Note 13)
---------------------------------------------------------------------------
-----
Net Income after taxes $1,259,000 (Note 14)
---------------------------------------------------------------------------
-----
1. XYZ owns 30 percent of the outstanding Hobble Corp. (HC)
stock. Hobble Corp. reported $1,000,000 of income for the year.
XYZ accounted for its investment in HC under the equity
method and it recorded its pro rata share of HC's earnings for
the year. HC also distributed a $200,000 dividend to XYZ.
2. Of the $20,000 interest income, $5,000 was from a City of
Seattle bond (issued in 2007) that was used to fund public
activities, $7,000 was from a Tacoma City bond (issued in
2008) used to fund private activities, $6,000 was from a fully
taxable corporate bond, and the remaining $2,000 was from a
money market account.
3. This gain is from equipment that XYZ purchased in February
and sold in December (that is, it does not qualify as §1231
gain).
4. This includes total officer compensation of $2,500,000 (no
one officer received more than $1,000,000 compensation).

3. 5. This amount is the portion of incentive stock option
compensation that vested during the year (recipients are
officers).
6. XYZ actually wrote off $27,000 of its accounts receivable as
uncollectible.
7. Regular tax depreciation was $1,900,000 and AMT (and
ACE) depreciation was $1,700,000.
8. In the current year, XYZ did not make any actual payments
on warranties it provided to customers.
9. XYZ made $500,000 of cash contributions to qualified
charities during the year.
10. On July 1 of this year XYZ acquired the assets of another
business. In the process it acquired $300,000 of goodwill. At
the end of the year, XYZ wrote off $30,000 of the goodwill as
impaired.
11. XYZ expensed all of its organizational expenditures for
book purposes. It expensed the maximum amount of
organizational expenditures allowed for tax purposes.
12. The other expenses do not contain any items with book-tax
differences.
13. This is an estimated tax provision (federal tax expense) for
the year. (In a subsequent class period, we will learn how to
compute the correct tax provision.) Assume that XYZ is not
subject to state income taxes.
14. XYZ calculated that its domestic production activities
deduction (DPAD) is $90,000. This amount is not included on
the audited income statement numbers.

4. Estimated tax information:
XYZ made four equal estimated tax payments totaling $480,000.
Assume for purposes of estimated tax liabilities, XYZ was in
existence in 2011 and it reported a tax liability of $800,000.
During 2012, XYZ determined its taxable income at the end of
each of the four quarters as follows:
Quarter-end Cumulative taxable income (loss)
First $350,000
Second $800,000
Third $1,000,000
---------------------------------------------------------------------------
----
Finally, assume that XYZ is not a large corporation for purposes
of estimated tax calculations (Round your answers to the nearest
dollar amount. Omit the "$" sign in your response.)
a. Compute XYZ’s taxable income.
b. Compute XYZ’s regular income tax liability.
This problem uses 2012 Tax Rules
Please include a step-by-step explanation of how to arrive at the
correct answers
Running Head: UNIT 4 INDIVIDUAL PROJECT
1
UNIT 4 INDIVIDUAL PROJECT
2

5. Unit 4 Individual Project
Latoya Rush
AIU
2/1/13
Baroque art found its way during the church reformation during
1600-1700. It was during this period that the protestant
reformation had gained it ground and many Christians had
become Protestants. The eminence of the Catholic Church was
at stake and the Pope had to find a way that would restore the
popularity of the church among Christians. As part of the
reforms, the catholic introduced religious art that was thought
to spark spiritual imagination among its viewers. Through this
strategy, faith and ostentation were restored among the
Catholics and other individuals who still contemplated on
leaving for Protestantism.
(The crucifixion of Saint Peter, Caravaggio, 1601)
‘The crucifixion of Saint Peter’ is one of the religious art
expressions that was made by Caravaggio in 1601. The painting
tries to give a detailed picture of what Saint Peter went through
after the ascending of Jesus. Even with some blurred
background, the painting shows the suffering of the people who
advocated for Christ. Caravaggio gives a simple painting that
sends a strong message to the viewer and avoids any form of
complexity that would confuse the viewer. This painting was
produced at a time when the Catholic Church was accused of
corruption and other negative behaviors that swayed the beliefs
of Christians, leading to a great number going for Protestantism
(Fitzpatrick, 2005).
(The Four Continents, Paul Reubens, 1615)
‘The Four Continents’ is a paint produced by Paul Reubens that
shows four men with their families and many children. The
painting is high quality, showing a rich blue background and a
water body at the surface. Paul Reubens was known as a strong

6. counter reformist whose knowledge and religious views about
Catholic Church must have influenced the drawing. The artwork
has acted as a symbol of the oneness in the Catholic Church and
how the church has influence from all parts of the world.
Therefore, Paul tries to point out that even with protestant
reformation; the Catholic Church still remained to be influential
all over the world (Joshi, 2012).
(The Ecstasy of St. Teresa by Giovanni Bernini, 1652)
‘The Ecstasy of St. Teresa is a piece of artwork that was
produced by Giovanni Bernini in 1652. The painting shows St.
Teresa, a nun who was filled with divine love after being
pierced by an angel with a flaming arrow. The artist has made
great use of light in the painting, giving the reaction of the nun
after having an experience with an angel. Being an experienced
artist, Giovanni was trying to depict the dominance of the
Catholic Church even with the prevalence of the protestant
reformation. With the mistrust and corruption that the Catholic
Church was being accused of, the painting was meant to show
how the church was nearer to God than any other religious
group that existed during the time (Gardner, 2010).
In summation, Baroque art remains one of the most outstanding
art periods that left a mark in the world of art. Baroque art came
at a time when the majority was questioning the Catholic
Church on its ability to lead the world based on the corruption
and ungodliness within its leaders and followers. To win back
the trust of the Christians, the Pope decided to choose religious
art as a tool that would attract back the Protestants. Through
this strategy, faith and ostentation were restored among the
Catholics and other individuals who still contemplated on
leaving for Protestantism.
References
Fitzpatrick, A. (2005). The Baroque period. Mankato, Minn:
Creative Education.
Gardner, H., & Kleiner, F. S. (2010). Gardner's art through the

7. ages: The western perspective. Boston, MA:
Wadsworth/Cengage Learning.
Joshi, P. V. (2012). Life in four continents. S.l.: Iuniverse Inc.