Reference no: EM131586538

QUESTION 1 - B Corporation, a cash basis taxpayer has the following items of income and expense:

Sales                                                                            $30,000

Accelerated Depreciation                                                $2,000 (Straight-Line Depreciation is only$1,000)

Employee Wages                                                           $3,000

Long-Term Capital Loss on Sale                                      $3,000

Dividends received from 100% owned subsidiary              $10,000

Long-Term Capital Loss on stock Sale                              $5,000

Municipal Bond Interest Income                                       $4,000

Long Term Capital Loss carryover form prior year             $25,000

Federal Income Taxes Paid                                              $1,000

What is B Corporation's taxable income?

QUESTION 2 - Using all the relevant facts in the previous question, calculate B Corporation's current earnings and profits.