With Puerto Rico Tax Laws:

1. Determine the net income (loss) before donations for the corporation as of December 31, 2020 using the table to reconcile the items presented in the statement of income and expenses, from a financial accounting basis to tax accounting.

2. Determine and compute the special deductions to be claimed before the net taxable income or net operating.

3. Determine the income tax payable or applicable refund from the corporation. Assume that the Alternative Minimum Tax is $ 0.

1. Determine the net income (loss) before donations for the corporation as of December 31. December 2020. using the table to reconcile the items presented in the statement of income and expenses. from a financial accounting base to tax accounting. Corporations: Net Taxable income, Contribution and Credits Seg som 2020-21 L. DATA Distribuidores Valencia. Corp., is a for-profit corporation duly organized in 2014 under the laws of Puerto Rico. Its shareholders, Jos and Maria, both own 50% of the common shares of the entity. The entity uses the accumulation system ("accrual basis"). As of December 31, 2020, the audited financial statements of the corporation are presented below: Distributors Valencia, Corp. Situation Status December 31st 2019 2020 Assets $ 950,000 600,000 0 5,120,000 2,400,000 500,000 80,000 250,000 9.900,000 $ 1,227,000 700,000 125,000 5,500,000 2,000,000 500,000 0 150,000 10,202,000 Cash Accounts receivable Contribution paid in advance Inventory Property and equipment, net Investment in Sofi Industries, Corp. Investment in XYZ Corporation Investment in bonds Total Assets Passives Debts to pay Loans payable Income tax payable Total Liabilities Capital Common actions Surplus of capital Retained earnings Total Capital Total Liabilities and Capital 800,000 1,000,000 0 1,800,000 650,000 900,000 100,000 1,650,000 100.000 3,000,000 5,000,000 8,100,000 $ 9,900,000 100,000 3,000,000 5,452,000 8,552,000 S 10,202,000 Note 1 two 3rd 36 Distributors Valencia, Corp. Statement of Income and Expenses For the year ended December 31, 2020 Description Quantity Sales $ 13,500,000 Less: Cost of goods sold 4,500,000 Gross margin 9,000,000 Other income Dividends 15.000 Interests 12,000 Capital gain 40,000 Loss of capital (60,000) Gross income 9,007,000 Expenses Wages 5,375,000 Rent 1,200,000 Depreciation 400,000 140.000 Advertising 375,000 Payroll taxes 280,000 Repair and Maintenance 225,000 Donations 250,000 Professional services 130,000 Foods 40,000 Entertainment 25,000 Miscellaneous 15,000 Total expenditures 8.455,000 Net Income Before Tax 552,000 Provision of Income Tax 100.000 Net income S 452,000 4 5 6 Boat expense 7 8 4 Grades 1. The corporation owns 12% of the common stock of Sofi Industries, Inc., a corporation domestic of Puerto Rico 2. The $ 12,000 corresponds to the following types of interest: S 4,000 of government bonds of California, S 500 in bank account deposits, and $ 7,500 in Premium Corporation bonds, entity subject to the payment of income tax. 3. Capital assets: to. The corporation sold on August 15, 2020 an investment in XYZ common shares Corporation for S 120,000. The shares were purchased on March 18, 2015 by S 80.000 b. The corporation sold on November 23, 2020 an investment in government bonds of New York $ 70,000. The bonds were purchased on July 1, 2015 for $ 100.000 4. Salaries reported to the Department of the Treasury through withholding vouchers (W-2) It amounts to $ 5 million. Informed professional services amount to $ 130,000. 5. The monthly rent for the various facilities of the corporation totals $ 100,000. At December 31 In 2020, the corporation accumulated the income for the year on its books. However, the rent for the month of December was paid on March 30, 2021. 6. The equipment subject to depreciation has a cost of $ 5,000,000, useful life of 12.5 years, depreciation straight line. Depreciation claimed in prior years $ 800,000 7. The corporation owns a boat which they use occasionally to entertain their employees. and hold meetings with salespeople and company executives. 8. Donations were made to qualified non-profit entities. Additional Information 9. The corporation paid $ 125,000 of estimated income tax applicable to the taxable year 2020 10. The entity generated $ 1,900,000 of net operating loss in 2019. 1. Determine the net income (loss) before donations for the corporation as of December 31. December 2020. using the table to reconcile the items presented in the statement of income and expenses. from a financial accounting base to tax accounting. Corporations: Net Taxable income, Contribution and Credits Seg som 2020-21 L. DATA Distribuidores Valencia. Corp., is a for-profit corporation duly organized in 2014 under the laws of Puerto Rico. Its shareholders, Jos and Maria, both own 50% of the common shares of the entity. The entity uses the accumulation system ("accrual basis"). As of December 31, 2020, the audited financial statements of the corporation are presented below: Distributors Valencia, Corp. Situation Status December 31st 2019 2020 Assets $ 950,000 600,000 0 5,120,000 2,400,000 500,000 80,000 250,000 9.900,000 $ 1,227,000 700,000 125,000 5,500,000 2,000,000 500,000 0 150,000 10,202,000 Cash Accounts receivable Contribution paid in advance Inventory Property and equipment, net Investment in Sofi Industries, Corp. Investment in XYZ Corporation Investment in bonds Total Assets Passives Debts to pay Loans payable Income tax payable Total Liabilities Capital Common actions Surplus of capital Retained earnings Total Capital Total Liabilities and Capital 800,000 1,000,000 0 1,800,000 650,000 900,000 100,000 1,650,000 100.000 3,000,000 5,000,000 8,100,000 $ 9,900,000 100,000 3,000,000 5,452,000 8,552,000 S 10,202,000 Note 1 two 3rd 36 Distributors Valencia, Corp. Statement of Income and Expenses For the year ended December 31, 2020 Description Quantity Sales $ 13,500,000 Less: Cost of goods sold 4,500,000 Gross margin 9,000,000 Other income Dividends 15.000 Interests 12,000 Capital gain 40,000 Loss of capital (60,000) Gross income 9,007,000 Expenses Wages 5,375,000 Rent 1,200,000 Depreciation 400,000 140.000 Advertising 375,000 Payroll taxes 280,000 Repair and Maintenance 225,000 Donations 250,000 Professional services 130,000 Foods 40,000 Entertainment 25,000 Miscellaneous 15,000 Total expenditures 8.455,000 Net Income Before Tax 552,000 Provision of Income Tax 100.000 Net income S 452,000 4 5 6 Boat expense 7 8 4 Grades 1. The corporation owns 12% of the common stock of Sofi Industries, Inc., a corporation domestic of Puerto Rico 2. The $ 12,000 corresponds to the following types of interest: S 4,000 of government bonds of California, S 500 in bank account deposits, and $ 7,500 in Premium Corporation bonds, entity subject to the payment of income tax. 3. Capital assets: to. The corporation sold on August 15, 2020 an investment in XYZ common shares Corporation for S 120,000. The shares were purchased on March 18, 2015 by S 80.000 b. The corporation sold on November 23, 2020 an investment in government bonds of New York $ 70,000. The bonds were purchased on July 1, 2015 for $ 100.000 4. Salaries reported to the Department of the Treasury through withholding vouchers (W-2) It amounts to $ 5 million. Informed professional services amount to $ 130,000. 5. The monthly rent for the various facilities of the corporation totals $ 100,000. At December 31 In 2020, the corporation accumulated the income for the year on its books. However, the rent for the month of December was paid on March 30, 2021. 6. The equipment subject to depreciation has a cost of $ 5,000,000, useful life of 12.5 years, depreciation straight line. Depreciation claimed in prior years $ 800,000 7. The corporation owns a boat which they use occasionally to entertain their employees. and hold meetings with salespeople and company executives. 8. Donations were made to qualified non-profit entities. Additional Information 9. The corporation paid $ 125,000 of estimated income tax applicable to the taxable year 2020 10. The entity generated $ 1,900,000 of net operating loss in 2019