Problem 20-58 (LO. 4, 5)

Del Mar Corporation (EIN 33-1234567) was formed and began operations on January 1, 2021. The corporate address is 463 E. Pershing Blvd. Cheyenne, WY 82001. Del Mar uses the accrual basis of accounting. The corporation's 12/31/2021 trial balance is presented below.

	General Ledger Account Balance
Account Name	Debit		Credit
Cash in checking	$25,000
Accounts receivable	20,000
GAAP reserve for bad debts			$7,000
Inventory (at cost)	87,000
Investments	1,000
Organization expense	0
Equipment	90,000
Accumulated depreciationequipment			10,000
Land	0
Other intangible assets	4,000
Accounts payable			14,000
Accrued income taxes			(910)
Accrued interest			3,400
Notes payable			85,000
Common stock			80,000
Additional paid-in capital			0
Retained earnings			0
Revenues			260,000
Sales returns and allowances	0
Investment income			20,000
Gain (loss) on sale of assets	0		0
Purchase returns and allowances			0
Cost of goods sold	105,000
Advertising	5,000
Amortization	0
Bad debt expense, addition to GAAP reserve	7,000
Charitable contributions	0
Depreciation	10,000
Dues and subscriptions	0
Interest expense	3,400
Miscellaneous	0
Payroll taxes	10,000
Professional fees	0
Repairs	3,000
Utilities	0
Wages	105,000
Income taxes	3,090
Totals	$478,490		$478,490

Additional pertinent facts include the following.

• Investment income is dividends received from a 10% owned domestic corporation.
• Wages include $75,000 of compensation to Marion Ore, CEO and 100% owner of Del Mar Corp. Her Social Security number is 456-78-0123. She devotes 100% of her time to Del Mar.
• Book depreciation was recorded to match tax depreciation.
• Del Mar made $4,000 of estimated tax payments during 2021. These were debited to the accrued income taxes account.
• The "Other intangible assets" are organizational costs. An election was made to expense the maximum amount of organization costs for tax.
• None of the bad debts were deemed fully worthless.

Compute Del Mar's taxable income and Federal tax liability for 2021.

If an amount is zero, enter "0".

Gross receipts or sales
Cost of goods sold
Investment income
Total gross income
Less Expenses:
Compensation of officers
Salaries and wages
Repairs and maintenance
Bad debts
Taxes and licenses
Interest
Depreciation/Amortization
Advertising
Taxable income before dividends received deduction
Dividends received deduction
Taxable income
Tax