Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Accounting Basics Expert

Corporate Tax:

Jackson Corporation prepared the given book income statement for its year ended December 31, 2011:

Sales                                        $900,000
Minus: Cost of goods sold       (500,000)
Gross Profit:                              $400,000

Plus: Dividends received on Invest Corporations stock     $3,000
         Gain on sale of Invest Corporation’s stock               30,000
         Total dividends and gain                                           $33,000

Minus: Depreciation ($7,500 + $32,000)                    $39,500
           Bad debt allowance                                         22,000
           Other operating expenses                              105,500
           Loss on sale of Equipment 1                           55,000

Total expenses and loss                                 (221,500)
Net income per books before taxes                $178,500
Minus: Federal income tax expense                (70,000)
Net income per books                                      $108,500

Information on equipment depreciation and sale:

Equipment 1:

• Acquired March 3, 2008 for $180,000
• For books: 12-year life; straight-line depreciation
• Sold June 17, 2011 for $80,000

Sales price                                                  $80,000
Cost                                                            $180,000
Minus: Depreciation for 2008 (1/2 year)     $7,500
Depreciation for 2009 ($180,000/12)         15,000
Depreciation for 2010 (1/2 year)                15,000
Depreciation for 2011 (1/2 year)                7,500
Total book depreciation                             (45,000)
Book value at time of sale                         (135,000)
Book loss on sale of Equipment 1              $(55,000)

• For tax: Seven-year MACRS property for which the corporation made no Sec. 179 election in the acquisition year end elected out of bonus depreciation.

Equipment 2:

• Acquired February 16, 2009 for $384,000
• For books: 12-year life; straight-line depreciation
• Book depreciation in 2011: $384,000/12 = $32,000
• For tax: Seven-year MACRS property for which the corporation made the Sec. 179 election but elected out of bonus depreciation.

Other information:

• Under the direct prepare off method, Jackson deducts $15,000 of bad debts for tax purposes.

• Jackson has a $40,000 NOL carryover and a $6,000 capital loss carryover from last year.

• Jackson purchased the Invest Corporation stock (less than 20% owned) on June 21, 2008, for $25,000 and sold the stock on December 22, 2011, for $55,000.

• Jackson Corporation has qualified production activities income of $120,000, and the applicable percentage is 9%.

Required:

a) For 2011, find out Jackson’s tax depreciation deduction for Equipment 1 and Equipment 2, and determine the tax loss on the sale of Equipment 1.

b) Prepare a schedule reconciling net income per books to taxable income before special deductions (Form 1120, line 28).

c) Ignore first-year bonus depreciation.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M9272

Have any Question? 


Related Questions in Accounting Basics

Question - doug is considering investing in one of two

Question - Doug is considering investing in one of two partnerships that will build, own, and operate a hotel. One is located in Canada and one is located in Arizona. Assuming both investments will generate the same befo ...

Question - what are the steps to finding the current stock

Question - What are the steps to finding the current stock price if dividend is $.6 at the end of the year, rate of return is 10.5% and growth rate is 7.7%?

Question - on december 31 2018 fine company acquired a new

Question - On December 31, 2018, Fine Company acquired a new delivery truck in exchange for an old delivery truck that it had acquired in 2012. The old truck was purchased for $70,000 and had a book value of $26,600. On ...

Question paper 01 ubs tax evasion paperprepare 500-750-word

Question: Paper 01: UBS Tax Evasion Paper Prepare 500-750-word paper in which you address the following: • Discuss the matter of 2008 UBS Tax Evasion charges. • Explain your understanding of their cause, the impact on th ...

Question - santana rey created business solutions on

Question - Santana Rey created Business Solutions on October 1, 2015. The company has been successful, and Santana plans to expand her business. She believes that an additional $86,000 is needed and is investigating thre ...

Thinking of the middle east identify where you encounter

Thinking of the Middle East, identify where you encounter products, services, or food items that should be relatively uniform and are based on standard inputs or costs. Identify the items, their standard components, and ...

Questions -1 pop corporation paid 100000 cash for the net

Questions - 1. Pop Corporation paid $100,000 cash for the net assets of Son Company, which consisted of the following: Book Value Fair Value Current assets $ 40,000 $ 56,000 Plant and equipment 160,000 220,000 Liabilitie ...

Question - you are the controller of harmon oil a

Question - You are the Controller of Harmon Oil, a medium-sized oil exploration company in Texas. It is time to make a forecast of the company's annual earnings. You know that additional losses will be recognized before ...

Practical and written assessment -assignment

Practical and Written Assessment - Assignment questions Baulkham Hills Shire Council owns and operates an animal shelter that performs three services: housing and finding homes for stray and unwanted animals, providing h ...

Question - us steel issues a 2000000 bond at 10 for 8 years

Question - US Steel issues a $2,000,000 bond at 10% for 8 years. The market interest rate is 9%. Be sure to use the time value of money tables, not the formulas; and round your answers to the nearest whole dollars. Quest ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As