Question

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 C has taxable income of $35,000 prior to consideration of any net operating loss. In 2018, the Company incurred a net operating loss of $30,000. Determine 2019 taxable income.

TAX ACTIVITY #3

Dividend of $10,000 from a 45% owned corporation; taxable income before DRD of $50,000. What is the amount excluded?

Dividend of $19,000 from a 15% owned corporation; taxable income before DRD of $75,000. What is the amount excluded?

Dividend of $8,000 from a 10% owned corporation; taxable income before DRD of $7,000. What is the amount excluded?

TAX ACTIVITY #4: Complete Form M-1

RNP, Inc. has book income of $120,000 properly determined in accordance with financial accounting principles. The following information is also available:

•    The company received a $10,000 dividend from a large publicly traded domestic corporation. (owns less than 20%)

•    Income tax expense on the financial statements was $30,000.

•    Depreciation expense on the financial statements is $25,000 less than depreciation expense determined using tax laws.

•    The company received life insurance proceeds of $15,000.

•Charitable contributions of $20,000 were made. (the allowable amount is $13,000.)

Determine the taxable income of RNP, INC.

Answer 1

TAX ACTIVITY #1

ABx company has $20000 loss in the year 2019. A company should report as operating loss for the year 2019 $20000.

TAX ACTIVITY#2

Calculation of Taxable income-:

Company B has net operating profit in 2019 is $50000. In 2018 the company has a loss of $20000.

Taxable income in 2019 = 50000-20000 = $30000

Company C has net operating profit in 2019 is $35000. In 2018 the company has a loss of $30000

Taxable income in 2019 = 35000-30000 = $5000

TAX ACTIVITY#3

(i) DRD should be deducted @ 80% if the company holds more than 20% and less then 80 % shareholdings in other corporations.

In current situations, the company holds 45% shares. The dividend receive by company is $10000.

DRD = 10000*80% = 8000 .

Such amounts should be excluded.

(ii) DRD should be deducted @ 70% if the company holds less then 20 % shareholdings in other corporations.

In current situations, the company holds 15% shares. The dividend received by the company is $19000.

DRD = 19000*70% = 13300 .

Such amounts should be excluded.

(iii) DRD should be deducted @ 70% if the company holds less then 20 % shareholdings in other corporations.

In current situations, the company holds 10% shares. The dividend received by the company is $8000.

DRD = 8000*70% = 5600 .

Such amounts should be excluded.

TAX ACTIVITY#4

	PARTICULARS	WORKING	AMOUNT
	BOOK PROFIT		120000
LESS	DRD	10000*70%	7000
LESS	DEPRECIATION EXP		25000
	NET INCOME		88000
LESS	DONATIONS (ALLOWABLE)		13000
	TAXABLE INCOME		75000

NOTE

1. Income tax expenses are disallowed for a deduction.

2. LIC receipts are exempt for taxable. It assumes that LIC receipts are not included in book income.