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:

Expert Solution

Morningstar's taxable income and tax liability for current year:

Particulars	Calculations	Taxable Amount
Gross income from operations	90000
Less:Operating Expenses	75000	15000
Dividends from less than 20% owned corporations-Dividend received deduction will be according to general of 70%	30%of 50000	15000
Charitable contribution-50% deduction is allowed	50% of 10000-taxable	5000
NOL carryover from preceeding tax year	whole amount will be deducted	(25000)
Taxable amount		10000
Tax Liability 15% tax bracket		1500

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