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XYZ is a calendar-year corporation that began business on January 1, 2021. For the year, it reported the following information in its current-year audited income

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XYZ is a calendar-year corporation that began business on January 1, 2021. For the year, it reported the following information in its current-year audited income statement. Notes with important tax information are provided below. Use Exhibit 16-6 XY2 corporation Income statement for current year Book Income Revenue from sales $ 41,400,000 Cost of Goods Sold (27,945,000) Gross profit $ 13,455,000 300,000 25,6002 (4,000) 3,000? 50,000 $ 13,829,600 Other income: Income from investment in corporate stock Interest income Capital gains (105ses) Gain or loss from disposition of fixed assets Miscellaneous income Gross Income Expenses Compensation Stock option compensation Advertising Repairs and Maintenance Rent Bad Debt expense Depreciation Warranty expenses Charitable donations Meals (all at restaurante Goodwill impairment Organizational expenditures Other expenses Total expenses Income before taxes Drovision for income taxes Net Tocon after taxes (7,514,00034 (214,000,5 (1,364,000) (82,000) (29,000) (48,000) (1,575,000,7 (84,000) (500,000) (19,400) (33,500,10 (53.000) 11 (154,000 12 $(11.662000) 12.159,700 (400,000,13 1,759,700 1. XYZ owns 30% of the outstanding Hobble Corporation (HC) stock. Hobble Corporation reported $1,000,000 of income RRRRRRrethth- i 1. XYZ owns 30% of the outstanding Hobble Corporation (HC) stock. Hobble Corporation reported $1,000,000 of income for the year. XYZ accounted for its investment in HC under the equity method, and it recorded its pro rata share of HC's earnings for the year. HC also distributed a $200,000 dividend to XYZ. For tax purposes, HC reports the actual dividend received as income, not the pro rata share of HC's earnings. 2. Of the $25,600 interest income, $6,400 was from a City of Seattle bond, $8,400 was from a Tacoma City bond, $7,400 was from a fully taxable corporate bond, and the remaining $3,400 was from a money market account 3. This gain is from equipment that XYZ purchased in February and sold in December (.e., it does not qualify as 51231 gain). 4. This includes total officer compensation of $2,500,000 (no one officer received more than $1,000,000 compensation). 5. This amount is the portion of Incentive stock option compensation that was expensed during the year (recipients are officers). 6.XYZ actually wrote off $30,500 of its accounts receivable as uncollectible. 7. Tax depreciation was $2,075,000 8. In the current year, XYZ did not make any actual payments on warranties it provided to customers, 9.XYZ made $500,000 of cash contributions to qualified charities during the year. The donations are qualified charitable contributions for purposes of determining the charitable contribution limitation 10. On July 1 of this year XYZ acquired the assets of another business. In the process, it acquired $321,000 of goodwill. At the end of the year, XYZ wrote off $33,500 of the goodwill as impaired. 11. XYZ expensed all of its organizational expenditures for book purposes, XYZ expensed the maximum amount of organizational expenditures allowed for tax purposes 12. The other expenses do not contain any items with book-tax differences, 13. This is an estimated tax provision (federal tax expense) for the year. Assume that XYZ is not subject to state income taxes Estimated tax information: XYZ made four equal estimated tax payments totaling $407,000 ($100.000 per quarter). For purposes of estimated tax liabilities, assume XYZ was in existence in 2020 and that in 2020 it reported a tax liability of 5556,000. During 2021, XYZ determined its taxable income at the end of each of the four quarters as follows: Cumulative taxable incon (los) $ 470,000 $1,135,000 $ 1.470.000 Finally, assume that XYZ is not a large corporation for purposes of estimated tax calculations. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.) Quarter-ond First Second Third Estimated tax information: XYZ made four equal estimated tax payments totaling $407,000 ($100,000 per quarter). For purposes of estimated tax liabilities, assume XYZ was in existence in 2020 and that in 2020 it reported a tax liability of $556.000. During 2021, XYZ determined its taxable income at the end of each of the four quarters as follows: Cumulative taxable income (ons) First $ 470,000 Second $ 1,135,000 Third $ 1,470,000 Finally, assume that XYZ is not a large corporation for purposes of estimated tax calculations. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.) Quarter-end e. Determine the quarters for which XYZ is subject to underpayment of estimated tax penalties (Round "Annualization Factor" for Fourth quarter to 2 decimal places.) (5) Actual Installment (1) Required cumulative (2) Estimated tax paymont (por payment under quarter under por annualized method your tax method (3) Required payment based on current years ability (3) Required cumulative payment Underpayment Donally 1st quarter 2nd quarter 3rd quartet 4th quarter

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