In 2020, Merced, Inc. (a C-corporation) had net operating income of $20,000.  During 2021, Merced also had long-term capital gains of $50,000 and long-term capital losses of $65,000.  In addition, Merced, Inc. received a $70,000 dividend from Dolphin, Inc. in 2020.  Merced owns 25% of the shares of Dolphin. Note:  the operating income only includes revenue and expenses directly related to operations (it does not include any capital transactions or dividends).   Determine Merced’s tax liability of 2020.

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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In 2020, Merced, Inc. (a C-corporation) had net operating income of $20,000.  During 2021, Merced also had long-term capital gains of $50,000 and long-term capital losses of $65,000.  In addition, Merced, Inc. received a $70,000 dividend from Dolphin, Inc. in 2020.  Merced owns 25% of the shares of Dolphin. Note:  the operating income only includes revenue and expenses directly related to operations (it does not include any capital transactions or dividends).

 

Determine Merced’s tax liability of 2020.

 
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