The following applies to Nirvana, Inc. for their 2020 tax year.

Nirvana wants you to tell them what their tax liability is. Do a tax computation. (Do not do a tax return)

Compute the corporate taxable income and the tax using the 2020 corporate income tax.

The corporate Tax Rate is 21%

Income: Revenue Bank Interest Municipal Bond Interest Dividends (Nirvana's ownership is 1%) Dividends (Nirvana's ownership is 50%) Capital Losses Rental Income $220,000 600 300 1,000 3,000 (5,000) 16,000 Expenses I Compensation of Officers Other Wages Repairs Interest Expense - Corporate credit Cards Meals (100%) Telephone Advertising Depreciation - GAAP (MACRS is 6000) Professional Fees Last Year's State income tax Last Year's Federal Income Tax 50,000 29,000 600 300 4,000 3,200 700 8,000 600 1,800 1,000