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\fGross receipts from sales Expenses: Employment taxes Interest expense Organizational costs Office rent expenses Real estate taxes Utilities expense Wage expense Charitable contributions (non operating gains/losses) Depreciation deduction (including 50% bonus and normal 1st year depreciaion) A: Net income = Gross receipts - A The maximum deduction the company can take for depreciation is $1,131,932 However, the company can take upto 500,000 + 616,000 + 123200 = 1239200 1391222 10250 30000 52600 31000 15600 11300 93540 15000 1131932 1391222 0 Webster Inc., Taxable Income and Tax Liability Cash receipts from sales $1,391,222 LESS: Expenses Charitable contributions $15,000 Employee taxes $10,250 Interest Expense $30,000 Organizational costs $52,600 Office rent expense $31,000 Real Estate taxes $15,600 Utilities expense $11,300 Wages expense $93,540 Total Expenses ($259,240) Adjusted Gross Income $1,131,982 LESS DEDUCTIONS: Section 179 Expenses (Subject to Spending CAP of $2,000,000) and Deduction Limit of $500,000 per year Furniture $112,000 Warehouse $190,000 Machinery and Equipment $198,000 Total Section 179 expenses allowable $500,000 ($500,000) $616,000 ($616,000) LESS: 50% Bonus First Year Depreciation Machinery and Equipment 50 %*( $1,430,000-$198,000) Taxable Income $15,982 Tax Liability (0.15*$15,982) $2,397.30 Gross receipts from sales Expenses: Employment taxes Interest expense Organizational costs Office rent expenses Real estate taxes Utilities expense Wage expense Charitable contributions (non operating gains/losses) Depreciation deduction (including 50% bonus) A: Net income = Gross receipts - A 1391222 10250 30000 52600 31000 15600 11300 93540 15000 1116000 1375290 15932 Gross receipts from sales Expenses: Employment taxes Interest expense Organizational costs Office rent expenses Real estate taxes Utilities expense Wage expense Charitable contributions (non operating gains/losses) Depreciation deduction (including 50% bonus and normal 1st year depreciaion) A: Net income = Gross receipts - A The maximum deduction the company can take for depreciation is $1,131,932 However, the company can take upto 500,000 + 616,000 + 123200 = 1239200 1391222 10250 30000 52600 31000 15600 11300 93540 15000 1131932 1391222 0 Webster Inc., Taxable Income and Tax Liability Cash receipts from sales $1,391,222 LESS: Expenses Charitable contributions $15,000 Employee taxes $10,250 Interest Expense $30,000 Organizational costs $52,600 Office rent expense $31,000 Real Estate taxes $15,600 Utilities expense $11,300 Wages expense $93,540 Total Expenses ($259,240) Adjusted Gross Income $1,131,982 LESS DEDUCTIONS: Section 179 Expenses (Subject to Spending CAP of $2,000,000) and Deduction Limit of $500,000 per year Furniture $112,000 Warehouse $190,000 Machinery and Equipment $198,000 Total Section 179 expenses allowable $500,000 ($500,000) $616,000 ($616,000) LESS: 50% Bonus First Year Depreciation Machinery and Equipment 50 %*( $1,430,000-$198,000) Taxable Income $15,982 Tax Liability (0.15*$15,982) $2,397.30 Gross receipts from sales Expenses: Employment taxes Interest expense Organizational costs Office rent expenses Real estate taxes Utilities expense Wage expense Charitable contributions (non operating gains/losses) Depreciation deduction (including 50% bonus) A: Net income = Gross receipts - A 1391222 10250 30000 52600 31000 15600 11300 93540 15000 1116000 1375290 15932