10 QUESTION3(30 POINTS) 017, Reid Incorporated, a manufacturer and retailer of c

Question

10 QUESTION3(30 POINTS) 017, Reid Incorporated, a manufacturer and retailer of computer parts, reported the following activity during the year: Gross Profit Dividends from 30% owned corporation Operating Expenses (Includes payroll of $4,348,062) Charitable Contributions In addition, Reid has a net operating loss carryover from 2011 amounting to $357,037, and the $77,610,835 147,150 42,176,082 8,356,240 corporation had production activities income amounting to $35,434,753. A: Calculate Reid's taxable income and tax liability. (25 points) B: Calculate Reid's charitable contribution carryover to 2018 (5 points)

Explanation / Answer

Answer:

A:

Deductions:

(* The corporation owns 30% shares which is between 20% and 80% allowing 80% Dividend received deduction)

Tax Liablilty: 0.21 x 60,251,115.63 = $12,652,734.28

B:

Charitable contribution carryover = 8,356,240 - 7,101,665.6 = $1,254,574.4

Gross Profit $77,610,835 Dividends 147,150 Production activities income 35,434,753 Less: Operating Expenses 42,176,082 Total Income $71,016,656

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