Solution-Compute crodyens taxable income

Compute crodyens taxable income

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Reference no: EM13502951

Croydon is calendar year, accrual Basis Corporation, MR and Mrs. Croyden (cash basis taxpayers ) are the sole corporation shareholder . Mr. Croyden is president and Mrs. croyden is vise president of the corporation, Croyden's financial records. Prepared in accordance with GAAP, show the following information for the year,

Revenues from sides goods	$12,900,000
Cost of goods sold( LIFO)	(9,260,000)
Gross profit	3,640,000
Bad debt expense	24,000
Administration salaries and wages	612,000
State and local business taxes	135,000
Interest expense	33,900
Advertising	67,000
Annual property insurance premiums	19,800
Annual life insurance premiums	7,300
Depreciation expense	148,800
Repairs maintains ,utilities	81,000

Croydon's records reveal the following facts.

Under the UNICAP. Rules,Coryden had no capitalize $ 142,800 of administrative wages to inventory . These wages were expected for financial statement purpose.
Because of the UNICAP rules, Crodyen's cost of goods sold for tax purposes exceeds cost of goods sold for financial statement purpose by $ 219,000.
Bad debt expense equals the additional to corporation's allowance for bad debts .Actual wirte -offs of uncollectable accounts during the year totaled $31,200.
Administrative salaries includes as accrued $ 50,000 year -end bonus to Mr. .Croyden and accrued $ 20,000 year -end bonus to Mrs Croyden .these bonuses were paid on January 17 of the following year .
Life insurance premium were on the key -person polices for Mr. and Mrs. .Croyden .the Corporation is the policy beneficiary.
Croyden disposed of two assets during the year (these disposition are not reflected in the financial statement information shown above) .it sold office furnishing for $ 45,000. The original cost of the furnishings was $ 40,000, and accumulated MACRS depreciation through date of sale was $ 12,700. It also exchanged transportation equipment for a 15 percent interest in the partnership. The original cost of the transportation equipment was $ 110, 000, and accumulated MACRS deprecation through date of exchange was $ 38,900.
MACRS depreciation for assets places in service in prior years (including the office furnishings and transportation equipment disposed of this year) is $ 187,600.the only assets acquired this year was equipment costing $ 275,000 .the equipment has a seven -year recovery period and was placed In the services on February 11 .
Coryden's prior year tax return show no nonrecaptured section 1231 losses and $ 7,400 capital loss carryforward
Solely on the basis above facts, compute Crodyen's taxable income

Reference no: EM13502951

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Compute crodyens taxable income

Reference no: EM13502951

Reference no: EM13502951

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