Question
Corp, Inc. is an accrual basis C corporation. Compute corporate taxable income and E&P for the year. Book revenue and expense and other information is
Corp, Inc. is an accrual basis C corporation. Compute corporate taxable income and E&P for the year. Book revenue and expense and other information is as follows: Accrual basis sales were $50,000,000 (book basis) In addition to these sales, Corp, Inc. received a $60,000 prepayment for a contract that began in the current year and will be completed in the following year. By the end of the current year, one third of the work had been completed. CGS of $13,000,000 (book basis) Salaries and benefits of $17,000,000 were paid which includes: CEOs salary of $1,300,000 taxable fringe benefits for the CEO of $40,000 nontaxable fringe benefits for the CEO of $200,000 Dividend income received of $50,000 (<20% ownership) Gain on sale of investments of $20,000 Municipal bond interest received of $20,000 Other expenses of $16,000,000 Book depreciation of $2,950,000, MACRS depreciation of $4,380,000, and ADS depreciation of $1,900,000 Federal income tax expense paid of $400,000 Capital loss carryforward from prior year of $200,000
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