Texark Inc., a calendar year taxpayer, reported $5,210,300 net income before tax on its financial statements prepared in accordance with GAAP. The corporation's records reveal the following information.• Depreciation expense per books was $713,700, and MACRS depreciation was $662,000.
• Texark exchanged old realty (-0- tax basis; $44,200 book basis) for new realty (FMV $50,000). Book gain was included in book income, although the exchange was nontaxable for tax purposes.
• Texark received a $100,000 insurance reimbursement for the destruction of machinery with a $29,000 tax basis and a $70,000 book basis. Texark spent $110,000 to replace the machinery before year-end.
Compute Texark's taxable income.
What will be an ideal response?
| Book income | $ | 5,210,300 | ||
| Book depreciation in excess of tax | 51,700 | |||
| Book gain on nontaxable exchange | (5,800 | ) | ||
| Book gain on nontaxable involuntary conversion | (30,000 | ) | ||
| Taxable income | $ | 5,226,200 |
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