Principles Of Taxation For Business And Investment Planning 2020 Edition
23rd Edition
ISBN: 9781259969546
Author: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
Publisher: McGraw-Hill Education
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Chapter 8, Problem 21AP
To determine
Calculate the amount taxable income for the situations given.
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This year, PRS Corporation generated $300,000 income from the performance ofconsulting services for its clients. It sold two assets during the year, recognizing a$36,000 gain on the first sale and a $49,000 loss on the second sale. Compute PRS’staxable income assuming that:Required:a.Both the gain and the loss were capital.b. Both the gain and the loss were ordinary.c. The gain was ordinary, and the loss was capital.d. The gain was capital, and the loss was ordinary.
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 $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…
Chapter 8 Solutions
Principles Of Taxation For Business And Investment Planning 2020 Edition
Ch. 8 - BBB Company, which manufactures industrial...Ch. 8 - Prob. 2QPDCh. 8 - Prob. 3QPDCh. 8 - Prob. 4QPDCh. 8 - Does the characterization of gain or loss as...Ch. 8 - Distinguish between a firms tax basis in an asset...Ch. 8 - Both Corporation A and Corporation Z have business...Ch. 8 - Mrs. Carly called her accountant with a question....Ch. 8 - Prob. 9QPDCh. 8 - Mr. K realized a loss on the sale of an asset to...
Ch. 8 - Prob. 11QPDCh. 8 - Prob. 12QPDCh. 8 - Prob. 13QPDCh. 8 - Prob. 14QPDCh. 8 - Prob. 1APCh. 8 - Several years ago, PTR purchased business...Ch. 8 - Prob. 3APCh. 8 - Prob. 4APCh. 8 - Prob. 5APCh. 8 - Prob. 6APCh. 8 - TPW, a calendar year taxpayer, sold land with a...Ch. 8 - Refer to the facts in the preceding problem and...Ch. 8 - Refer to the facts in problem 7. In the first year...Ch. 8 - Prob. 10APCh. 8 - Prob. 11APCh. 8 - In year 1, Aldo sold investment land with a 61,000...Ch. 8 - Prob. 13APCh. 8 - Prob. 14APCh. 8 - Silo Inc. sold investment land to PPR Inc. for...Ch. 8 - Prob. 16APCh. 8 - Prob. 17APCh. 8 - Prob. 18APCh. 8 - Shenandoah Skies is the name of an oil painting by...Ch. 8 - Koil Corporation generated 718,400 ordinary income...Ch. 8 - Prob. 21APCh. 8 - Alto Corporation sold two capital assets this...Ch. 8 - Zeno Inc. sold two capital assets in 2019. The...Ch. 8 - Prob. 24APCh. 8 - Prob. 25APCh. 8 - Firm OCS sold business equipment with a 20,000...Ch. 8 - Prob. 27APCh. 8 - Prob. 28APCh. 8 - This year, QIO Company generated 192,400 income...Ch. 8 - Prob. 30APCh. 8 - Prob. 31APCh. 8 - Since its formation, Roof Corporation has incurred...Ch. 8 - Corporation Q, a calendar year taxpayer, has...Ch. 8 - Prob. 34APCh. 8 - Firm P, a noncorporate taxpayer, purchased...Ch. 8 - Prob. 36APCh. 8 - Prob. 37APCh. 8 - Prob. 38APCh. 8 - A taxpayer owned 1,000 shares of common stock in...Ch. 8 - Prob. 40APCh. 8 - Prob. 41APCh. 8 - Prob. 42APCh. 8 - Prob. 43APCh. 8 - A fire recently destroyed a warehouse owned by...Ch. 8 - Prob. 45APCh. 8 - Bali Inc. reported 605,800 net income before tax...Ch. 8 - Prob. 47APCh. 8 - Prob. 48APCh. 8 - Prob. 49APCh. 8 - Prob. 1IRPCh. 8 - Prob. 2IRPCh. 8 - Prob. 3IRPCh. 8 - Prob. 4IRPCh. 8 - Prob. 5IRPCh. 8 - Prob. 6IRPCh. 8 - Firm WD sold depreciable realty for 225,000. The...Ch. 8 - Prob. 8IRPCh. 8 - Prob. 9IRPCh. 8 - Prob. 10IRPCh. 8 - Prob. 11IRPCh. 8 - For the past 12 years, George Link has operated...Ch. 8 - Prob. 2RPCh. 8 - Prob. 3RPCh. 8 - Prob. 4RPCh. 8 - Firm Z, a corporation with a 21 percent tax rate,...Ch. 8 - Mr. RH purchased 30 acres of undeveloped ranch...Ch. 8 - Prob. 3TPCCh. 8 - Prob. 4TPCCh. 8 - Prob. 5TPC
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- 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…arrow_forwardBurcham Corporation reported pretax book income of $600,000. The depreciation exceeded book depreciation by $400,000. In addition, the company received $300,000 of tax-exempt municipal bond interest. The company’s prior year tax return showed taxable income of $50,000. Compute the company’s book equivalent of taxable income. Use this number to compute the company’s total income tax provision or benefit.arrow_forwardX Corporation opted to deduct OSD.  The following are the results of its operation: Net sales -P3,450,000; Cost of Sales – P2,100,000; Dividend from Y Corporation, a domestic corporation – P150,000; Gain on sale of Building – P200,000; Selling Expenses – P70,000; Administrative Expenses – P30,000. What is the taxable net income? A. P 930,000 B. P 1,020,000 C. P 870,000 D. P 810,000arrow_forward
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