(Solved): 1. XYZ owns 30% of the outstanding Hobble Corporation (HC) stock. Hobble Corporation reported $1 ...

1. $$XYZ$$ owns $$30\%$$ of the outstanding Hobble Corporation (HC) stock. Hobble Corporation 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. $$\mathrm{HC}$$ also distributed a $$\$200,000$$ dividend to $$XYZ$$. For tax purposes, HC reports the actual dividend received as income, not the pro rata share of HC's earnings. 2. Of the $$\$26,400$$ interest income, $$\$6,600$$ was from a City of Seattle bond, $$\$8,600$$ was from a Tacoma City bond, $$\$7,600$$ was from a fully taxable corporate bond, and the remaining $$\$3,600$$ was from a money market account. 3. This gain is from equipment that $$XYZ$$ purchased in February and sold in December (i.e., 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 was expensed during the year (recipients are officers). 6. $$XYZ$$ actually wrote off $$\$31,000$$ of its accounts receivable as uncollectible. 7. Tax depreciation was $$\$2,100,000$$. 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 charities during the year 10. On July 1 of this year, $$XYZ$$ acquired the assets of another business. In the process, it acquired $$\$324,000$$ of goodwill. At the end of the year, $$XYZ$$ wrote off $$\$34,000$$ of the goodwill as impaired. 11. $$XYZ$$ expensed all of its organizational expenditures for book purposes. $$XYZ$$ 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. Assume that $$XYZ$$ is not subject to state income taxes. Estimated tax information: $$XYZ$$ made four equal estimated tax payments totaling $$\$400,000$$ ( $$\$100,000$$ per quarter). For purposes of estimated tax liabilities, assume $$XYZ$$ was in existence in 2021 and that in 2021 it reported a tax liability of $$\$556,000$$. During $$2022,XYZ$$ determined its taxable income at the end of each of the four quarters as follows: Finally, assume that $$XYZ$$ is not a large corporation for purposes of estimated tax calculations. Note: Do not round intermediate calculations. Round your answers to the nearest dollar amount. Required: a. Compute XYZ's taxable income. b. Compute XYZ's income tax liability. c. Complete XYZ's Schedule M-1. Note: Enter all amounts as positive numbers. e. Determine the quarters for which $$XYZ$$ is subject to underpayment of estimated tax penalties. Note: Round "Annualization Factor" for Fourth quarter to 2 decimal places.