Question

In: Accounting

2) Green Corporation reported the following activity during the year: Gross Profit    $68,360,820 Operating Expenses...

2) Green Corporation reported the following activity during the year:

Gross Profit    $68,360,820

Operating Expenses         $49,001,726

Dividends Received          $373,000

(from 12% owned corporation)   

a) Calculate the corporation’s taxable income and tax liabilityassuming production activities income amounted to $19,359,094.

b) Calculate the corporation’s taxable income and tax liability assuming operating expenses amount to $68,449,371 assuming that production activities income is zero or negative.

c) Calculate the corporation’s taxable income and tax liability assuming operating expenses amount to $69,576,275 assuming that production activities income is zero or negative.

Bedford Corporation reported the following activity during the year:

Gross Profit       $70,037,630

Dividends Received from 10% owned domestic corporation    $271,000

Operating Expenses    $44,546,039

Charitable Contributions    $8,007,570

In addition, the corporation has a net operating loss carryforward from 2015 amounting to $1,808,372, and production activities income amounted to $25,491,591.

a) How much is the corporation’s taxable income and tax liabilitythis year?

b) What carryovers are available to the corporation in future years?

Corporate Tax Rate Schedule

If taxable income (Form 1120, Line 30) is:

Over But Not Over Tax Is Of the amount over   

$0 $50,000 15% $0

$50,000 $75,000 $7,500 +25% $50,000

$75,000 $100,000 $13,750 +34% $75,000

$100,000 $335,000 $22,250 +39% $100,000

$335,000 $10,000,000 $113,900 +34% $335,000

$10,000,000 $15,000,000 $3,400,000 +35% $10,000,000

$15,000,000 $18,333,333 $5,150,000 +38% $15,000,000

$18,333,333 no limit 35% $0

Solutions

Expert Solution

Green Corporation

(a)

Gross Profit                                    $68,360,820

-         Operating Expenses                                ($49,001,726)

= Operating Profit                                                               $19,359,094

     +    Dividends Received(70% Deduction allowed)        $1,11,900

Taxable Income                                                                   $19,470,994

Tax 35%                                                                              $6,814,847.9

(b)

Gross Profit                                    $68,360,820

-         Operating Expenses                                ($68,449,371)

= Operating Profit                                                               ($88,551)

     +   Dividends Received(70% Deduction allowed)         $1,11,900

Taxable Income                                                                   $23,349

Tax 15%                                                                              $3502.35

(c)

Gross Profit                                    $68,360,820

-         Operating Expenses                                ($69,576,275)

= Operating Profit                                                              ($1,215,455)

     +   Dividends Received(70% Deduction allowed)         $1,11,900

Taxable Income (To be carried forward)                           ($1,103,555)

Tax 15%                                                                              $ 0

Bedford Corporation

(a)

Gross Profit                                    $70,037,630

-         Operating Expenses                                ($44,546,039)

= Operating Profit                                                               $25,491,591

-         Carried forward loss                                               ($1,808,372)

     +    Dividends Received(70% Deduction allowed)        $81,300

-         Deduction in charitable Contributions                     ($8,007,570)

Taxable Income                                                                   $15,756,949

Tax $5,150,000 + 38%*756949                                          $5,437,640.62                                                                             

(b)

No carryover

ekkarill92 answered 2 years ago
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