Question

1. Green Corporation has gross profits on sales of $175,000 and deductible expenses of $225,000. In addition, Green has a net capital gain of $65,000. Green's taxable income is

A) a $50,000 loss.

B) a $115,000 loss.

C) $50,000.

D) $15,000.

2. Corporation has taxable income of $250,000 calculated before the charitable contribution deduction and before its dividends-received deduction of $34,000. COBM makes cash contributions of $40,000 to charitable organizations. What is COBM Corporation's charitable contribution deduction for the current year?

A) $24,600

B) $28,000

C) $30,000

D) $35,000

3. Identify which of the following statements is true.

A) A corporation that is a member of an affiliated group filing a consolidated tax return may be allowed a tax year which is different from the group's parent.

B) An S corporation must generally use a calendar year.

C) A corporation's first year must cover a twelve-month period.

D) All of the above are false.

4. Corona Corporation has the following income and expense items for the year:

Gross receipts from sales	$75,000
Dividends received from 30%-owned domestic corporation	50,000
Expenses connected with sales	40,000

The taxable income of Ghandi Corporation is  

A) $100,000.

B) $85,000.

C) $52,500.

D) $35,000.

Answer 1

1.)
Gross Profits on sales	$        175,000
Less: Deductible exp	$      (225,000)
Add: Net capital gain	$          65,000
Taxable income	$          15,000
2.)
Taxable income before charitable contribution	$        250,000
Less: Dividend received deduction	$        (34,000)
Taxable income	$       216,000
20% of Adjusted Income	$          43,200
Actual contribution	$          40,000
Deduction for charitable organisation can be claimed	$          40,000
3.)
d) All above are false
4.)
Gross receipts from sales	$          75,000
Less: expenses connected with sales	$        (40,000)
Add: Dividend received	$          50,000
Less:DRD	$        (32,500)	50000*65%
Taxable income	$          52,500
% Holding	DRD available
General rule	50%
More than 20% Less than 80%	65%
More than 80%	100%
In our case
Holding =	30%
DRD is 65%
Correct answer is
c) $ 52,500