Question
Dell Inc. has just completed its fiscal year ended December 31, 2019. Using GAAP, the accountant has determined that, for that taxation year , the
Dell Inc. has just completed its fiscal year ended December 31, 2019. Using GAAP, the accountant has determined that, for that taxation year , the Company has experienced a Net Loss Before Taxes and Amortization Expense of $113,000. The accountant provides the following information that was used in the determination of the Net Loss for accounting purposes:
1. The Company was forced to pay damages of $12,300 for failure to perform a service contract. The amount was paid when the client threatened to bring action for breach of contract. The $12,300 was expensed in the current year.
2. The Companys property tax expense of $19,500 includes an amount of $1,100 that was paid to a regional municipality in which the Company maintains a fishing lodge for its employees.
3. The Companys expenses include contributions to registered charities of $13,700.
4. The Companys expenses include costs of new landscaping at their administration building in the amount of $9,800.
5. The Company deducted a loss of $10,100 resulting from a theft by one of its clerical employees.
6. The current salary expense included a bonus payable to the Companys president in the amount of $14,500. It will be paid on February 1, 2020. It also includes a bonus to the vice president, in the amount of $10,000 which will be paid in July 2020.
7. The insurance expense included the premium on a whole life policy on the life of the presidents wife in the amount of $9,500. This was not a group life policy and the proceeds were payable to the Company.
8. The president and his wife attended a convention that resulted in $5,200 in travel expenses for the Company. Of this amount, $1,900 related to the fact that the presidents wife chose to accompany him on this trip.
9. The Companys interest expense included bond discount amortization in the amount of $950.
10. The Companys expenses included a total amount of $12,500 for business meals and entertainment. The expenses also included $5,000 cost of holding the company barbeque for all of the staff.
Required: Compute the Companys Net Income For Tax Purposes for the year ending December 31, 2019 before the consideration of CCA write-offs. Indicate why you have not included any of the preceding items in your calculations.
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