Upsilon Pharmaceuticals

• Upsilon Pharmaceuticals reported taxable income of $2,400,000.
• $300,000 in research and development costs were capitalized but should have been expensed.
• Interest expense of $200,000 was not deducted.
• There was a $150,000 tax refund not claimed.

Requirement: Adjust the taxable income and compute the correct tax liability at a corporate tax rate of 25%. Identify and correct the errors.

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