Question

In the current year, Woodpecker, Inc., a C corporation with $8,500,000 in assets, reported amortization of $40,000 on its financial statements and deducted amortization of $55,000 on its Federal tax return.

(1) Is Woodpecker required to file a Schedule M-3?
If Woodpecker is required to file a Schedule M-3, the difference in amortization amounts treated on that schedule is reported on line 28, Part III as follows:
(2) $40000 in column (a) _____________.
(3) $15000 in column (b) _____________.
(4) $55000 in column (d) _____________.

Answer 1

(1) No

(2) $40000 in column (a) Book Amortization

(3) $15000 in column (b) Temporary Difference

(4) $55000 in column (d) Tax Amortization

Step-by-step explanation:

1. Woodpecker is not required to file a Schedule M-3

In a situation where Woodpecker is been required to file a Schedule M-3, the difference in amortization amounts treated on that schedule will be reported as :

(2) $40,000 in column (a) Book Amortization

Because based on the information given about Woodpecker, Inc. We were told the company reported amortization of $40,000 on its financial statements which means the $40,000 reported is the BOOK AMORTIZATION

(3) $15000 in column (b) Temporary Difference

The $15,000 is the TEMPORARY DIFFERENCE between $40,000 Book Amortization and $55,000 Tax Amortization ($55,000-$40,000=$15,0000)

(4) $55000 in column (d) Tax Amortization

Based on the information given about

Woodpecker, Inc. We were told that the Corporation deducted amortization of $55,000 on its Federal tax return, hence the amount deducted is the TAX AMORTIZATION