Shamberly Corp. is a calendar year, accrual basis corporation that has been in business for 30 years. The following income and expenses appear on Shamberly's records for the year ended December 31, Year 3. $ 1,000,000 400,000 Revenues and Gains Gross sales Dividends: 10%-owned domestic corporation ABC Corp. Interest California State bonds U.S. treasury bonds Gain on sale of ABC stock Key person life insurance proceeds Total 15,000 35,000 95,000 300,000 $ 1,845,000 Costs and Expenses Cost of goods sold Salaries and wages Depreciation Meals expense (restaurants) Key person life insurance premiums State income taxes Federal income taxes Rent, Utilities, etc. Other expenses Total Net Income 650,000 420,000 220,000 20,000 15,000 10,000 45,000 200,000 50,000 1,630,000 215 000 $ 1. Calculate Shamberly's taxable income (or net operating loss) for the year and analyze the impact of the dividends-received deduction on Shamberly's taxable income for the year. (Amounts to be deducted should be indicated by a minus sign.) * Answer is complete but not entirely correct. Revenues and Gains Gross sales Dividends: 10%-owned domestic corporation ABC Corp. Interest on California State bonds Interest on U.S. treasury bonds Gain on sale of ABC stock Key person life insurance proceeds Total Costs and Expenses Cost of goods sold Salaries and wages Depreciation Meals expense (restaurants) Key person life insurance premiums Amount $ 1,000,000 400,000 $ 15,000 X 35,000 95,000 S 300,000 X $ 1,845,000 650,000 420,000 220,000 20,000 15,000 X 10,000 State income taxes Dividends: 10%-owned domestic corporation ABC Corp. Interest on California State bonds Interest on U.S. treasury bonds Gain on sale of ABC stock Key person life insurance proceeds Total 400,000 $ 15,000 X 35,000 95,000 $ 300,000 $ 1,845,000 Costs and Expenses Cost of goods sold Salaries and wages Depreciation Meals expense (restaurants) Key person life insurance premiums State income taxes Federal income taxes Rent, Utilities, etc. Other expenses Total 650,000 420,000 220,000 20,000 15,000 X 10,000 45,000 X 200,000 200,000 X $ 1,780,000 65,000 (107,500) $ -42,500 Taxable income before DRD Less: Dividends-received deduction Taxable income (or Net operating loss) 2. Shamberly Corp is contemplating making a charitable contribution that would be deductible in Year 3. It would like to give the minimum amount necessary to maximize its tax benefit from the contribution deduction for Year 3. Analyze the effect this contribution will have on Shamberly's taxable income for Year 3. (Amounts to be deducted should be indicated by a minus sign.) * Answer is complete but not entirely correct. Taxable income before charitable contribution Less: Charitable contribution Taxable income before DRD Less: Dividends-received deduction Taxable income (or Net operating loss) $ 215,000 X 0 215,000 107,000 X $ 322,000 Shamberly Corp. is a calendar year, accrual basis corporation that has been in business for 30 years. The following income and expenses appear on Shamberly's records for the year ended December 31, Year 3. $ 1,000,000 400,000 Revenues and Gains Gross sales Dividends: 10%-owned domestic corporation ABC Corp. Interest California State bonds U.S. treasury bonds Gain on sale of ABC stock Key person life insurance proceeds Total 15,000 35,000 95,000 300,000 $ 1,845,000 Costs and Expenses Cost of goods sold Salaries and wages Depreciation Meals expense (restaurants) Key person life insurance premiums State income taxes Federal income taxes Rent, Utilities, etc. Other expenses Total Net Income 650,000 420,000 220,000 20,000 15,000 10,000 45,000 200,000 50,000 1,630,000 215 000 $ 1. Calculate Shamberly's taxable income (or net operating loss) for the year and analyze the impact of the dividends-received deduction on Shamberly's taxable income for the year. (Amounts to be deducted should be indicated by a minus sign.) * Answer is complete but not entirely correct. Revenues and Gains Gross sales Dividends: 10%-owned domestic corporation ABC Corp. Interest on California State bonds Interest on U.S. treasury bonds Gain on sale of ABC stock Key person life insurance proceeds Total Costs and Expenses Cost of goods sold Salaries and wages Depreciation Meals expense (restaurants) Key person life insurance premiums Amount $ 1,000,000 400,000 $ 15,000 X 35,000 95,000 S 300,000 X $ 1,845,000 650,000 420,000 220,000 20,000 15,000 X 10,000 State income taxes Dividends: 10%-owned domestic corporation ABC Corp. Interest on California State bonds Interest on U.S. treasury bonds Gain on sale of ABC stock Key person life insurance proceeds Total 400,000 $ 15,000 X 35,000 95,000 $ 300,000 $ 1,845,000 Costs and Expenses Cost of goods sold Salaries and wages Depreciation Meals expense (restaurants) Key person life insurance premiums State income taxes Federal income taxes Rent, Utilities, etc. Other expenses Total 650,000 420,000 220,000 20,000 15,000 X 10,000 45,000 X 200,000 200,000 X $ 1,780,000 65,000 (107,500) $ -42,500 Taxable income before DRD Less: Dividends-received deduction Taxable income (or Net operating loss) 2. Shamberly Corp is contemplating making a charitable contribution that would be deductible in Year 3. It would like to give the minimum amount necessary to maximize its tax benefit from the contribution deduction for Year 3. Analyze the effect this contribution will have on Shamberly's taxable income for Year 3. (Amounts to be deducted should be indicated by a minus sign.) * Answer is complete but not entirely correct. Taxable income before charitable contribution Less: Charitable contribution Taxable income before DRD Less: Dividends-received deduction Taxable income (or Net operating loss) $ 215,000 X 0 215,000 107,000 X $ 322,000