Question
For the last completed calendar year, Thomas Corporation, an accrual basis calendar year taxpayer, had net income per books of $102,750 and a taxable income
For the last completed calendar year, Thomas Corporation, an accrual basis calendar year taxpayer, had net income per books of $102,750 and a taxable income of $15,750. Thomas had the following special transactions:
Life insurance proceeds on death of Corporations President $100,000
Premiums on same life insurance policy 10,000
Tax exempt bond interest 5,000
Tax exempt bond interest - expense 3,000
MACRS excess over straight/line used for books 4,000
Capital losses in excess of gains 6,000
Federal income tax liability 3,000
Tax exempt bond interest income.
a. | The item adds to net income for per the books to reach taxable income.
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b. | The item subtracts from net income per the books to reach taxable income.
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c. | The item has no effect on calculating from net income per the books to taxable income.
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d. | None of the above. |
Tax exempt bond interest-expense.
a. | The item adds to net income for per the books to reach taxable income.
| |
b. | The item subtracts from net income per the books to reach taxable income.
| |
c. | The item has no effect on calculating from net income per the books to taxable income.
| |
d. | None of the above. |
MACRS excess over straight/line used for books.
a. | The item adds to net income for per the books to reach taxable income.
| |
b. | The item subtracts from net income per the books to reach taxable income.
| |
c. | The item has no effect on calculating from net income per the books to taxable income.
| |
d. | None of the above |
Capital losses in excess of capital gains.
a. | The item adds to net income for per the books to reach taxable income.
| |
b. | The item subtracts from net income per the books to reach taxable income.
| |
c. | The item has no effect on calculating from net income per the books to taxable income.
| |
d. | None of the above. |
Federal income tax liability.
a. | The item adds to net income for per the books to reach taxable income.
| |
b. | The item subtracts from net income per the books to reach taxable income.
| |
c. | The item has no effect on calculating from net income per the books to taxable income.
| |
d. | None of the above. |
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