QUESTION 1

B Corporation, a cash basis taxpayer has the following items of income and expense:

Sales$30,000

Accelerated Depreciation $2,000 (Straight-Line Depreciation is only$1,000)

Employee Wages$3,000

Long-Term Capital Loss on Sale $3,000

Dividends received from 100% owned subsidiary $10,000

Long-Term Capital Loss on stock Sale $5,000

Municipal Bond Interest Income$4,000

Long Term Capital Loss carryover form prior year $25,000

Federal Income Taxes Paid $1,000

What is B Corporations taxable income?

QUESTION 2

Using all the relevant facts in the previous question, calculate B Corporations current earnings and profits.