Brown Corporation has the following items for Year 1. Its income statement is as follows. There are no NOL and capital losscarryback, and DPAD.

Income

Sales100

Dividends received from stock investments in

Less than 50% owned U.S.corporations30

Interest income

City of Flintbonds10

Google bonds20

Total capital gains20

Life insurance receipt from the pass-away of CEO Janet.50

Expenses

Cost of goodssold30

Salariesexpenses20

Total CapitalLoss22

Interest expense:

Loan to purchase City of Flintbonds12

Other businessloans11

Depreciation for bookpurpose*20

Premiums on term life insurance policies on lives

of CEO Janet andKim32

*Depreciation for tax purposes is $30

The following questions all concern about Year 1.

(a) What is the dividend received deduction? Ignore any exception or taxable income limitation.

(b) How much total interest income does Brown need to include in its taxable income? Hints: There are two interest incomes. Consider what Brown should include in the taxable income.

(c)How much total interest expense can Brown deduct from its taxable income? There are two major interest expenses. Consider what Brown can deduct from its taxable income.

(d)What is the net capital gains/losses?

(e) How much net capital loss deduction can Brown take in Year 1

(f) How much income from the life insurance receipt does Brown need to include in its taxable income?

(g) How much deduction from the premium on the life insurance policies can Brown deduct from its taxable income in Year 1?

(h) How much depreciation expense can Brown deduct from its taxable income in Year 1?

(i) How much cost of goods sold can Brown deduct from its taxable income in Year 1?

(j) Assume the dividend received deduction is 20. (this is not the correct answer for 1(a)). What is Brown's taxable income?