Corporate Taxation Part I: During 2013, Gain Corporation has net short-term capi
ID: 2453829 • Letter: C
Question
Corporate Taxation
Part I: During 2013, Gain Corporation has net short-term capital gains of $15,000, net long-term capital losses of $105,000, and taxable income from other sources of $460,000.
Prior years’ transactions included the following:
2009 net short-term capital gains $40,000
2010 net long-term capital gains 18,000
2011 net short-term capital gains 25,000
2012 net long-term capital gains 20,000
How are the capital gains and losses treated on Gorilla’s 2013 tax return?
Determine the amount of the 2013 capital loss that is carried back to each of the previous years.
Compute the amount of capital loss carry forward, if any, and indicate the years to which the loss may be carried.
Part II: Review the following potential investments by Gain Corporation
Corporate Investment
Scenario 1
Scenario 2
Scenario 3
Income from operations
$700,000
$800,000
$900,000
Expenses from operations
($600,000)
($850,000)
($910,000)
Qualifying dividends
$100,000
$100,000
$100,000
Calculate the dividends received deductions for each independent investment scenario assuming:
10% ownership of the investment
25% ownership of the investment
90% ownership of the investment
Requirements:
Clearly identify the requirements being addressed. Show all calculations within the cells of an Excel spreadsheet. This means that you must use formulas and links so that your thought process can be examined. Make good use of comments to convey your thought process as well. No hard coding of solutions is permitted. Submit a single MS Excel file for grading.
Can someone also show the calculations that would be input on the excel sheet?
Corporate Investment
Scenario 1
Scenario 2
Scenario 3
Income from operations
$700,000
$800,000
$900,000
Expenses from operations
($600,000)
($850,000)
($910,000)
Qualifying dividends
$100,000
$100,000
$100,000
Explanation / Answer
Answer:1)
The net capital loss of $90,000 is not deductible in 2013 but must be carried back to the three preceding years, applying it to 2010, 2011, and 2012, in that order. Such net capital loss is carried back or forward as a short-term capital loss.
Answer:2)
Answer:3) $27,000 ($90,000 – $63,000) STCL carryover to 2014, 2015, 2016, 2017, and 2018, in that order.
Answer:
The dividends received deduction is subject to a taxable income limitation. Under this limitation, the dividend received deduction is limited to the lesser of
(1) Deduction percentage x amount of dividend or
(2) Deduction percentage x taxable income (before DRD, NOL, DPAD, and capital loss carrybacks)
(2) does not apply however if after deducting the amount determined in (1) the corporation reports a loss.
Particulars Amount ($) Net short-term capital gain 15000 Net Long-term capital loss -105000 Net capital loss -90000Related Questions
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