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2012 Corporate Tax Rate Schedule (partial)
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Taxable Income Greater Than
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But Less Than Or Equal To
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Tax Is
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Of the amount exceeding
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$0
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$50,000
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15%
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$0
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$50,000
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$75,000
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$7,500 + 25%
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$50,000
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$75,000
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$100,000
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$13,750 + 34%
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$75,000
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$100,000
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$335,000
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$22,250 + 39%
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$100,000
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JKEB Corporation has the following revenues and expenses for the current tax year:
Sales revenue, net of returns . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000
Dividend Income (less than 20% owned investees) . . . . . . . . . . 25,000
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Normal business expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
1. What is JKEB Corporation's dividends-received deduction for the current tax year?
2. Assuming that JKEB Corporation's normal business expenses were $82,000 instead of $40,000, compute its dividends-received deduction for the current tax year.
JKEB Corporation incurred the following capital gains and losses in tax year 2012:
Short Term Capital Gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,000
Short Term Capital Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,000)
Long Term Capital Gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
Long Term Capital Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (28,000)
JKEB's prior corporate tax returns reflect the following net capital gain/ (loss):
2008 - $6,000 gain
2009-$8,000 gain
2010-($3,000) loss
2011-$1,000 gain
3. Calculate the net capital gain (loss) for 2012. How is this reported on the 2012 Form 1120?
4. Calculate the amount of capital loss carryback (if any) to tax years 2008 through 2011 inclusive.
5. Calculate the amount of capital loss carryforward (if any) to 2013. How will this loss be treated in 2013 (i.e., as a short-term or long-term capital loss)?
JKEB Corporation had the following items during its 2012 tax year:
Net income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $150,000
Dividends received (from less than 20% owned investees). . . . . . . . . . . 10,000
Charitable contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Net operating loss carryover from 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Long-term capital gains. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000
Long-term capital losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000
Short-term capital gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000
Capital loss carryover from 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000
Tax Credit........................................................................... 4,500
6. Compute JKEB Corporation's 2012 taxable income and income tax liability before tax credits.
7. What are the nature and amount of any carryovers to 2013?
8. What is the taxable amount due after using the tax credit?