Reference no: EM133119489
Question - Cramer Corporation, a calendar year, accrual basis corporation, reported $1.55 million of net income after tax on its 2020 financial statements prepared in accordance with GAAP. The corporation's books and records reveal the following information:
-Cramer's federal income tax expense per books was $211,000
-Cramer's book income included $21,000 of dividends received from a domestic corporation in which Cramer owns a 25% stock interest, and $9,500 of dividends from a domestic corporation in which Cramer owns a 5% stock interest.
-Cramer recognized $21,000 of capital losses this year and no capital gains.
-Cramer recorded $13,600 of book expense for meals and $15,500 of book expense for entertainment costs.
-Cramer's depreciation expense for book purposes totaled $411,000. MACRS depreciation was $475,000.
Required - How to Compute Cramer's federal taxable income and regular tax liability.