Problem 5

Raul and Amiel form a C corporation which they call, the RAM Corp. Compute RAM's 2018 taxable income in light of the following transactions completed in its first year of operation.

1. Gross profit from inventory sales of $750,000 (no book-tax differences)
2. Dividends received from a 30% owned corporation of $150,000 which is RAM's pro rata share of the investee's earnings
3. Expenses other than Dividend Received Deduction (DRD), charitable contribution and net operating loss are $450,000 (no book-tax differences)
4. NOL carry over from prior year $25,000
5. Cash charitable contributions amounted to $90,000