SEP, a calendar year corporation, reported $918,000 net income before tax on its financial statements prepared in accordance withGAAP. The corporation's records reveal the following information:• SEP incurred $75,000 of research costs that resulted in a new 17-year patent for the corporation. SEP expensed these costs for bookpurposes.• SEP's depreciation expense per books was $98,222, and its MACRS depreciation deduction was $120,000.• SEP was organized two years ago. For its first taxable year, it capitalized $27,480 start-up costs and elected to amortize them over180 months. For book purposes, it expensed the costs in the year incurred.Required:Compute SEP's taxable income. (Amounts to be deducted should be indicated with a minus sign. Do not round intermediatecomputations. Round final answers to the nearest whole dollar.)SEP's net book income before taxAdjustments:Research costsDepreciationAmortizationSEP's taxable incomeAmount

Taxable income: It implies to the income of the taxpayer on which the tax is charged or levied by…

Answered: EP, a calendar year corporation,…

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter17: Corporations: Introduction And Operating Rules

Section: Chapter Questions

Problem 5BCRQ

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Grevilla Corporation is a manufacturing company. The corporation has accumulated earnings of $950,000, and it can establish reasonable needs for $400,000 of that amount. Calculate the amount of the accumulated earnings tax (if any) that Grevilla Corporation is subject to for this year. $_____________
SEP, a calendar year corporation, reported $918,000 net income before tax on its current year financial statements prepared in accordance with GAAP. The corporation's records reveal the following information: • SEP incurred $75,000 of domestic research costs that resulted in a new 17-year patent for the corporation. SEP expensed these costs for book purposes. . SEP's depreciation expense per books was $98,222, and its MACRS depreciation deduction was $120,000. • SEP was organized two years ago. For its first taxable year, it capitalized $27,480 start-up costs and elected to amortize them over 180 months. For book purposes, it expensed the costs in the year incurred. Required: Compute SEP's taxable income. Note: Amounts to be deducted should be indicated with a minus sign. Do not round intermediate computations. Round final answers to the nearest whole dollar. SEP's net book income before tax Adjustments: Research costs Depreciation Amortization SEP's taxable income $ Amount 918,000…
SEP, a calendar year corporation, reported $918,000 net income before tax on its current year financial statements prepared in accordance with GAAP. The corporation's records reveal the following information: • SEP incurred $75,000 of domestic research costs that resulted in a new 17-year patent for the corporation. SEP expensed these costs for book purposes. • SEP's depreciation expense per books was $98,222, and its MACRS depreciation deduction was $120,000. • SEP was organized two years ago. For its first taxable year, it capitalized $27,480 start-up costs and elected to amortize them over 180 months. For book purposes, it expensed the costs in the year incurred. Required: Compute SEP's taxable income. Note: Amounts to be deducted should be indicated with a minus sign. Do not round intermediate computations. Round final answers to the nearest whole dollar. Answer is complete but not entirely correct. Amount $ 918,000✔ SEP's net book income before tax Adjustments: Research costs…
SEP, a calendar year corporation, reported $918,000 net income before tax on its current year financial statements prepared in accordance with GAAP. The corporation's records reveal the following information: • SEP incurred $75,000 of domestic research costs that resulted in a new 17-year patent for the corporation. SEP expensed these costs for book purposes. • SEP's depreciation expense per books was $98,222, and its MACRS depreciation deduction was $120,000. • SEP was organized two years ago. For its first taxable year, it capitalized $27,480 start-up costs and elected to amortize them over 180 months. For book purposes, it expensed the costs in the year incurred. Required: Compute SEP's taxable income. Note: Amounts to be deducted should be indicated with a minus sign. Do not round intermediate computations. Round final answers to the nearest whole dollar. Answer is complete but not entirely correct. SEP's net book income before tax Adjustments: Research costs Depreciation…
EP, a calendar year corporation, reported $918,000 net income before tax on its current year financial statements prepared in accordance with GAAP. The corporation’s records reveal the following information: SEP incurred $75,000 of domestic research costs that resulted in a new 17-year patent for the corporation. SEP expensed these costs for book purposes. SEP’s depreciation expense per books was $98,222, and its MACRS depreciation deduction was $120,000. SEP was organized two years ago. For its first taxable year, it capitalized $27,480 start-up costs and elected to amortize them over 180 months. For book purposes, it expensed the costs in the year incurred. Required: Compute SEP’s taxable income
SEP, a calendar year corporation, reported $918,000 net income before tax on its current year financial statements prepared in accordance with GAAP. The corporation's records reveal the following information: • SEP incurred $75,000 of domestic research costs that resulted in a new 17-year patent for the corporation. SEP expensed these costs for book purposes. • SEP's depreciation expense per books was $98,222, and its MACRS depreciation deduction was $120,000. • SEP was organized two years ago. For its first taxable year, it capitalized $27,480 start-up costs and elected to amortize them over 180 months. For book purposes, it expensed the costs in the year incurred. Required: Compute SEP's taxable income. Note: Amounts to be deducted should be indicated with a minus sign. Do not round intermediate computations. Round final answers to the nearest whole dollar. SEP's net book income before tax Adjustments: Research costs Depreciation Amortization SEP's taxable income $ Amount 918,000
Sailor, Inc., a calendar year corporation, reported $1,003,000 net income before tax on its financial statements in accordance with GAAP. The corporate records reveal the following information: •Depreciation expense per books was $45,000, and the corporation’s MACRS depreciation deduction was $74,000. •Two years ago, Sailor Inc. realized a $75,000 gain on the sale of investment property and elected to use the installment method to report the gain for tax purposes. Its gross profit percentage is 25% and it received a $50,000 principal payment on its installment note this year. •Marketable securities were sold to Sailor’s only shareholder for $35,000. Sailor purchased the securities two years ago for $45,000. •Business equipment was sold for $50,000. The original cost of the equipment was $100,000. Book accumulated depreciation through the date of sale was $42,000, and MACRS accumulated depreciation through the date of sale was $60,000. •UNICAP rules require the firm to recognize $90,000…
Lanco Corporation, an accrual-method corporation, reported taxable income of $1,720,000 this year and paid Federal income tax of $361,200. Included in the computation of taxable income were the following items: • MACRS depreciation of $253,000. Depreciation for earnings and profits purposes is $124,000. • A net capital loss carryover of $13,700 from last year. • A net operating loss carryover of $31,000 from last year. $76,750 capital gain from the distribution of land to the company's sole shareholder (see below). Not included in the computation of taxable income were the following items: • Tax-exempt income of $8,600. • Life insurance proceeds of $267,000. • Excess current-year charitable contribution of $2,300 (to be carried over to next year). • Tax-deferred gain of $21,300 on a like-kind exchange. • Nondeductible life insurance premium of $4,700. • Nondeductible interest expense of $3,600 on a loan used to buy tax-exempt bonds. . Lanco's accumulated E&P at the beginning of the…
Lanco Corporation, an accrual-method corporation, reported taxable income of $1,600,000 this year. Included in the computation of taxable income were the following items: • MACRS depreciation of $226,000. Depreciation for earnings and profits purposes is $133,000. • A net capital loss carryover of $14,000 from last year. • A net operating loss carryover of $28,900 from last year. • $77,550 capital gain from the distribution of land to the company's sole shareholder (see below). Not included in the computation of taxable income were the following items: • Tax-exempt Income of $9,650. • Life Insurance proceeds of $259,000. • Excess current-year charitable contribution of $2,800 (to be carried over to next year). • Tax-deferred gain of $21,000 on a like-kind exchange. . • Nondeductible life insurance premium of $4,100. • Nondeductible Interest expense of $3,900 on a loan used to buy tax-exempt bonds. Lanco's accumulated E&P at the beginning of the year was $3,050,000. During the year,…
Gosling, Inc., a calendar year, accrual basis corporation, reported $756,000 net income after tax on its financial statements prepared in accordance with GAAP. The corporation's financial records reveal the following information: Gosling earned $3,500 on an investment in tax-exempt municipal bonds. Gosling received an advance payment of rent this year for $25,000. This amount was not included in book income. Gosling's depreciation expense per books was $72,000, and its MACRS depreciation deduction was $105,000. Gosling recorded $58,000 of business meals and $27,000 of entertainment expense for book purposes. Gosling's federal income tax expense per books was $220,000. a. Compute Gosling's taxable income and regular tax liability. b. Prepare a Schedule M-1, page 5, Form 1120, reconciling Gosling's book and taxable income.
Lanco Corporation, an accrual-method corporation, reported taxable income of $2,020,000 this year. Included in the computation of taxable income were the following items: MACRS depreciation of $301,000. Depreciation for earnings and profits purposes is $193,000. A net capital loss carryover of $20,100 from last year. A net operating loss carryover of $26,500 from last year. $60,600 capital gain from the distribution of land to the company’s sole shareholder (see below). Not included in the computation of taxable income were the following items: Tax-exempt income of $5,300. Life insurance proceeds of $340,000. Excess current-year charitable contribution of $2,600 (to be carried over to next year). Tax-deferred gain of $27,700 on a like-kind exchange. Nondeductible life insurance premium of $2,900. Nondeductible interest expense of $2,100 on a loan used to buy tax-exempt bonds. Lanco's accumulated E&P at the beginning of the year was $2,870,000. During the year, Lanco made the…
Lanco Corporation, an accrual-method corporation, reported taxable income of $1,460,000 this year. Included in the computation of taxable income were the following items: MACRS depreciation of $200,000. Depreciation for earnings and profits purposes is $120,000.A net capital loss carryover of $10,000 from last year.A net operating loss carryover of $25,000 from last year.$65,000 capital gain from the distribution of land to the company’s sole shareholder (see below).Not included in the computation of taxable income were the following items: Tax-exempt income of $5,000.Life insurance proceeds of $250,000.Excess current-year charitable contribution of $2,500 (to be carried over to next year).Tax-deferred gain of $20,000 on a like-kind exchange.Nondeductible life insurance premium of $3,500.Nondeductible interest expense of $1,000 on a loan used to buy tax-exempt bonds.Lanco’s accumulated E&P at the beginning of the year was $2,400,000. During the year, Lanco made the following…

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