There are two taxable income problems in the spreadsheet attached. Work through both problems listing out all income and deduction items.
NOTE - The Gross Income in the problem is referring to Revenue - Cost of Goods Sold = Gross Profit. Any other income items are in addition to the gross income amount.
Question 1: ABC Corporation reported the following items in 2016:
| Gross Income |
800,000 |
|
|
|
| Business Expenses |
775,000 |
|
|
|
| Dividends |
300,000 |
---> |
250,000 |
from XYZ Corp (ABC owns 65% of XYZ Stock) |
|
|
|
50,000 |
from RST Corp (ABC owns 15% of RST Stock) |
| Domestic Production Income |
40,000 |
---> |
Allocable W-2 Wages = $50,000 |
| Charitable Contributions |
75,000 |
|
|
|
| Capital Loss Carryforward |
10,000 |
---> |
From 2014 |
| Net Operating Loss Carryforward |
60,000 |
---> |
From 2011 |
Based on the information provided, compute ABC Corporation's Taxable Income for 2016.
List all items included in calculation (Similar to presentation on Form 1120)
What amounts, if any, will carryforward?
Question 2) ZYX Corporation reported the following items in 2016: 25 POINTS
| Gross Income |
650,000 |
|
|
|
| Business Expenses |
400,000 |
|
|
|
| Dividends |
100,000 |
---> |
100,000 |
from 80% owned subsidiary |
| Net Capital Gain |
15,000 |
|
|
|
| Domestic Production Income |
90,000 |
---> |
Allocable W-2 Wages = $70,000 |
| Charitable Contributions |
25,000 |
|
|
|
| Capital Loss Carryforward |
5,000 |
---> |
From 2015 |
| Net Operating Loss Carryforward |
10,000 |
---> |
From 2004 |
Based on the information provided, compute ZYX Corporation's Taxable Income for 2016.
List all items included in calculation (Similar to presentation on Form 1120)
What amounts, if any, will carryforward?