Lopez results for the current year are are as follows: Gross Revenue- $600,000 O

Question

Lopez results for the current year are are as follows:

Gross Revenue- $600,000

Operating Expenses-$200600

Dividend Income (Stock ownership 9%)- 2000

a. How much is Lopez's taxable income for year 2014?

b. Assuming your answer to question A was 400,000, how much is the corporations income tax? The corporation is not a professional service corporation.

C. Included in the deducation of operating expenses in the previous question was a deduction of 10,000 (this is the deductible portion) for meals. There are no other adjustments not indicated here and in the previous question. Recall that E&P is the abilitly of the corporation to make distrubutions, after tax. How much is Jeff's "earning and profits" for 2014?

Explanation / Answer

Taxable income = gross revenue - operating expenses + dividend income

= 600,000 - 200,600 +2,000

= $401,400

2)

At income of $400,000 the tax would be $120,000 at 30% tax rate.

3)

Subtrating 10,000 from operating expense will increase the income by 10,000

So the income is

$401,400 + 10,000 = $414,400

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