Case Facts: Lubbock Corporation reported the following activity in 2017: Income

Question

Case Facts: Lubbock Corporation reported the following activity in 2017: Income from operations: Deductions from operations before Special items: Dividends from 15% owned corporations $2,000,000 (1,300,000) 100,000 (40,000) (130,000) (35,000) (140,000) . Total meals and entertainment expenses .Total charitable contribution NOL carryover from previous year .DPAD deduction Assignment - Calculate the following in good form| 1. Corporate taxable income (30 points) 2. Corporate tax liability (5 points) 3. Charitable contribution carryover (if any) (5 points) ot 1 102 Words English (US) Chapter 16, Problem 35APS

Explanation / Answer

1. Calculation of corporate taxable income as follows:

Income from operations $2,000,000

(-) Deduction from operations before special items $(1,300,000)

(+) Dividends from 15% owned Corporations $100,000

(-) Total meal and entertainment expenses $(40,000)

(-) Total charitable contribution $(130,000)

(-) DPAD deduction $(140,000)

Current year profit $490,000

(-) Net operating loss(NOL) carry forward from previous year $(35,000)

Total Corporate Taxable income   $455,000

2. Corporate Tax Liability :

  

Corporate tax rate of u.s. corporation for this limit would be 113,900 + 34%

Tax liability = 113,900+ 455,000*34%

= 113,000+154700

= 267,700

3.There is no carry over of charitable contribution.You can carry over your contributions that you are not able to deduct in the current year because they exceed your adjusted-gross-income limits. You can deduct the excess in each of the next 5 years until it is used up, but not beyond that time. Your total contributions deduction for the year to which you carry your contributions cannot exceed 50% of your adjusted gross income for that year.

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.