Whitlaw Corporation $150,000 of gross proft on sales, operating expenses of $60,
ID: 2403967 • Letter: W
Question
Whitlaw Corporation $150,000 of gross proft on sales, operating expenses of $60,000 (excluding cost recovery), $4,000 dividend income frome a one-percent-owned corporation, a $10,000 capital gain and $15,000 capital loss, a $15,000 Section 179 deduction, additional tax depreciation of $25,000 (total financial accounting depreciation is $22,000), a $5,000 charitable conrtribution, and a net operating loss carryover from the prior year of $10,000.
a. What is Whitlaw's taxable income?
b. What is Whitlaw's income tax?
c. Complete a Schedule M-1 or a facsimile for the corporation.
Explanation / Answer
ANS
a) TAXABLE INCOME
NOL = $150000 - $60000 + $4000 - $15000 = $44000
CHARITABLE DEDUCTION = $44000 * 10% = $4400
DRD = $4000 * 70% = $2800
TAXABLE INCOME = $44000 - $4400 - $2800 = $36800
b) INCOME TAX = $36800 * 15% = $5520
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