Assignment Choice 1: Corporate Taxation
Part I: During 2013, Gain Corporation has net short-term capital gains of $15,000, net long-term capital losses of $105,000, and taxable income from other sources of $460,000.
Prior years' transactions included the following:
• 2009 net short-term capital gains $40,000
• 2010 net long-term capital gains 18,000
• 2011 net short-term capital gains 25,000
• 2012 net long-term capital gains 20,000
• How are the capital gains and losses treated on Gain's 2013 tax return?
• Determine the amount of the 2013 capital loss that is carried back to each of the previous years.
• Compute the amount of capital loss carry forward, if any, and indicate the years to which the loss may be carried.
Part II: Review the following potential investments by Gain Corporation
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Corporate Investment
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Scenario 1
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Scenario 2
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Scenario 3
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Income from operations
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$700,000
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$800,000
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$900,000
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Expenses from operations
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($600,000)
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($850,000)
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($910,000)
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Qualifying dividends
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$100,000
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$100,000
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$100,000
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• Calculate the dividends received deductions for each independent investment scenario assuming:
10% ownership of the investment
25% ownership of the investment
90% ownership of the investment
Requirements:
Clearly identify the requirements being addressed by preparing Schedule M-1 and Schedule M-2 of Form 1120. Show all calculations within the cells of an Excel spreadsheet. This means that you must use formulas and links so that your thought process can be examined. Make good use of comments to convey your thought process as well. No hard coding of solutions is permitted.