30,000. Use Exhibit 16-6. Gross profit from inventory sales of $310,000 (no book–tax differences). Dividends HC received from 28 percent-owned corporation of $120,000 (this is also HC’s pro rata share of the corporation’s earnings). Expenses other than DRD, charitable contribution (CC), and net operating loss (NOL) are $300,000 (no book–tax differences). NOL carryover from prior year of $12,000. Cash charitable contribution of $50,000. Assume the charitable donation is not a qualified contribution because HC Incorporated did not make the necessary election. Compute HC Incorporated’s current-year taxabl
Compute HC Incorporated’s current-year taxable income given the following information relating to its 2021 activities. Also, compute HC’s Schedule M-1 assuming that HC’s federal income tax expense for book purposes is $30,000. Use Exhibit 16-6.
- Gross profit from inventory sales of $310,000 (no book–tax differences).
- Dividends HC received from 28 percent-owned corporation of $120,000 (this is also HC’s pro rata share of the corporation’s earnings).
- Expenses other than DRD, charitable contribution (CC), and net operating loss (NOL) are $300,000 (no book–tax differences).
- NOL carryover from prior year of $12,000.
- Cash charitable contribution of $50,000. Assume the charitable donation is not a qualified contribution because HC Incorporated did not make the necessary election.
Compute HC Incorporated’s current-year taxable income given the following information relating to its 2021 activities. (Negative amounts should be indicated by a minus sign. Leave no answer blank. Enter zero if applicable.)
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Book Income (Dr) CR |
Book-tax adjustments (DR) |
Book-tax adjustments CR |
Taxable Income (Dr) CR |
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Gross Profit |
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Other Income |
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Dividend Income |
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Gross Income |
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Expenses: |
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Business expenses other than DRD, CC, and NOL |
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Federal Income tax expense |
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Total expenses before charitable contribution, NOL, and DRD deduction |
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Income before charitable contribution, NOL, DRD |
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NOL carryover from prior year |
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Taxable income for charitable contribution limitation purposes (modified taxable income) |
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Charitable contributions |
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Taxable income before DRD |
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Dividends received deduction DRD |
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Book Taxable income |
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Compute HC’s Schedule M-1 assuming that HC’s federal income tax expense for book purposes is $30,000.
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6. Total |
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7. Income recorded on books this year not included on this return 9itemize) |
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Tax-exempt interest: |
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8. Deductions on this return not charged against book income this year (itemize) |
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b. Charitable contributions |
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9. Income |
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