Question

In: Accounting

A Corporation reported the following activity in 2010: Income from operations:                              &

A Corporation reported the following activity in 2010:

  • Income from operations:                                           $2,000,000
  • Deductions from operations before

Special items:                                                                (1,300,000)

  • Dividends from 15% owned corporations           100,000
  • Total business meals                                                        (40,000)
  • Total charitable contribution                                       (130,000)
  • NOL carryover from previous year                           (35,000)

Assignment - Calculate the following in good form:

  1. Corporate taxable income
  2. Corporate tax liability
  3. Charitable contribution carryover (if any)

Solutions

Expert Solution

Particulars $
Income from operations $        2,000,000
Less ordinary deductions $      (1,300,000)
Less Charitable deductions 10% of eligible base
$665,000 x 10%
$            (66,500)
Income before NOL & special deductions $           633,500
Less NOL As prior to 2018 100% deductible $            (35,000)
Income before special deductions $           598,500
Less Dividend received deduction $            (50,000)
Taxable income $           548,500
Tax rate 21%
Tax liability $           115,185
Charitable contribution carryover $             63,500

Working note;

Calculation of base for charitable deductions $
Total income $        2,000,000
Less Ordinary deductions $      (1,300,000)
Less NOL carryover to current year $            (35,000)
Base to calculate 10% limit for charity deduction $           665,000

For any clarification, please comment. Kindly Up Vote!


Related Solutions

Morningstar Corporation reported the following results for the current year: Gross income from operations: $90,000 Dividends...
Morningstar Corporation reported the following results for the current year: Gross income from operations: $90,000 Dividends from less than 20%-owned corporations: 50,000 Operating expenses: 75,000 Charitable contributions: 10,000 In addition, the corporation has a $25,000 NOL carryover from the preceding tax year. Compute Morningstar’s taxable income and tax liability for the current year:
Volunteer Corporation reported taxable income of $435,000 from operations this year. During the year, the company...
Volunteer Corporation reported taxable income of $435,000 from operations this year. During the year, the company made a distribution of land to its sole shareholder, Rocky Topp. The land’s fair market value was $87,000 and its tax and E&P basis to Volunteer was $62,000. Rocky assumed a mortgage attached to the land of $17,400. The company had accumulated E&P of $792,000 at the beginning of the year. A) Compute Volunteer’s total taxable income and federal income tax. B) Compute Volunteer's...
Volunteer Corporation reported taxable income of $470,000 from operations this year. During the year, the company...
Volunteer Corporation reported taxable income of $470,000 from operations this year. During the year, the company made a distribution of land to its sole shareholder, Rocky Topp. The land’s fair market value was $85,000 and its tax and E&P basis to Volunteer was $58,500. Rocky assumed a mortgage attached to the land of $17,000. Any gain from the distribution will be taxed at 21 percent. The company had accumulated E&P of $780,000 at the beginning of the year. b. Compute...
Wee Corporation began operations in 2011. It reported book income or loss of $(4,000), $5,000, and...
Wee Corporation began operations in 2011. It reported book income or loss of $(4,000), $5,000, and $5,000 during 2011-2013 respectively. During 2011-2013, the difference between taxable income and book income resulted from the following items: 1) During 2011-2013, Wee accrued post-retirement healthcare costs (OPEB) of $2,000, $4,000, and $6,000 respectively. The OPEB costs are deductible for tax purposes when paid in 2018. 2) During 2013, Wee reported $3,000 of tax-exempt interest on municipal securities. Tax rates for 2011-2014 were as...
Income from operations is one of the most important items reported by a company. Depending on...
Income from operations is one of the most important items reported by a company. Depending on the decision-making needs of management, income from operations can be determined using absorption costing or variable costing. Choose whether the following characteristics are most often associated with absorption costing or variable costing. Absorption Costing Variable Costing Required under generally accepted accounting principles (GAAP) Often used for internal use in decision making Cost of goods manufactured includes only variable manufacturing costs Used in reports prepared...
TAX ACTIVITY #1 ABX Company, a C Corporation, was formed in 2015 and reported net income...
TAX ACTIVITY #1 ABX Company, a C Corporation, was formed in 2015 and reported net income in each year of its operation. The company had net capital gains and losses as follows: How should the corporation report the 20,000 loss in 2019? TAX ACTIVITY #2 In 2019, Company B has taxable income of $50,000 prior to consideration of any net operating loss. In 2018, the Company incurred a net operating loss of $20,000. Determine 2019 taxable income. In 2019, Company...
During 2016, Henry reported the following income and loss: Activity X……………………………………..$50,000 loss Activity Y……………………………………..$20,000 income Both...
During 2016, Henry reported the following income and loss: Activity X……………………………………..$50,000 loss Activity Y……………………………………..$20,000 income Both Activity X and Activity Y are nonrental passive activities as to Henry. Henry purchased Activity X in 1988 and Activity Y in 1994. How much, if any, passive activity loss will be carried over to 2017?a. $50,000.B. $30,000. c.$20,000.d.   $0. My answer is (b)30,000. Since there is a 50,000 loss-25,000 passive loss limit =25,000- 20,000income =5,000+25,000=30,000. Is this correct and if not could you...
Randolph Company reported pretax net income from continuing operations of $1,003,000 and taxable income of $710,000....
Randolph Company reported pretax net income from continuing operations of $1,003,000 and taxable income of $710,000. The book-tax difference of $293,000 was due to a $283,000 favorable temporary difference relating to depreciation, an unfavorable temporary difference of $140,000 due to an increase in the reserve for bad debts, and a $150,000 favorable permanent difference from the receipt of life insurance proceeds. Randolph Company’s applicable tax rate is 34 percent. a. Compute Randolph Company’s current income tax expense. b. Compute Randolph...
Randolph Company reported pretax net income from continuing operations of $959,000 and taxable income of $590,000....
Randolph Company reported pretax net income from continuing operations of $959,000 and taxable income of $590,000. The book-tax difference of $369,000 was due to a $205,000 favorable temporary difference relating to depreciation, an unfavorable temporary difference of $88,000 due to an increase in the reserve for bad debts, and a $252,000 favorable permanent difference from the receipt of life insurance proceeds. c. Compute Randolph Company’s effective tax rate. (Round your answer to 2 decimal places.) Effective tax rate % d....
Apple reported the following pre tax income (loss) during 2010-2017 Income (Loss) Tax Rate Date rate...
Apple reported the following pre tax income (loss) during 2010-2017 Income (Loss) Tax Rate Date rate enacted into law 2010 180,000 35% 1/1/02 2011 125,000 35% 2012 60,000 35% 2013 80,000 35% 2014 70,000 38% 1/1/14 2015 (200,000) 40% 1/1/15 2016 80,000 40% 2017 220,000 35% 1/1/17 There are no temporary or permanent differences between taxable income and EBIT for ALL years Assume Apple will elect to carryback losses to the extent possible Also assume that at 12/31/15 Apple is...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT