Question
Cramer Corporation, a calendar year, accrual basis corporation, reported $1.45 million of net income after tax on its 2018 financial statements prepared in accordance with
Cramer Corporation, a calendar year, accrual basis corporation, reported $1.45 million of net income after tax on its 2018 financial statements prepared in accordance with GAAP.
The corporations books and records reveal the following information:
Cramer's federal income tax expense per books was $209,000.
Cramer's book income included $19,000 of dividends received from a domestic corporation in which Cramer owns a 25 percent stock interest, and $8,500 of dividends from a domestic corporation in which Cramer owns a 5 percent stock interest.
Cramer recognized $19,000 of capital losses this year and no capital gains.
Cramer recorded $12,600 of book expense for meals and $14,500 of book expense for entertainment costs.
Cramer's depreciation expense for book purposes totaled $409,000. MACRS depreciation was $475,000.
Compute Cramer's federal taxable income and regular tax liability.
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