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Eta Innovations reported taxable income of $1,300,000. An audit revealed that the company failed to deduct $200,000 in qualifying business expenses and included $100,000 of

Eta Innovations reported taxable income of $1,300,000. An audit revealed that the company failed to deduct $200,000 in qualifying business expenses and included $100,000 of non-deductible expenses in their calculations.

Requirement: Recalculate the taxable income and determine the correct tax liability at a corporate tax rate of 25%. Discuss the adjustments.


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