Reference no: EM13165056

The local Episcopal Church operates a retail shop.  The inventory consists of the typical items sold by commercial gift shop sales are to tourists and 20% are to church members.  The net income of the gift shop, before the salaries of the three gift shop employees and any Federal income tax is $300,000.  The salaries of the employees total $80,000.

What is the tax liability for the church?______________________________

 Problem 1. Feeder Organization Calculation

Repair Habitat Inc., a § 501(c)(3) organization, receives the following revenues and incurs the following expenses.

Grant from Habitat for All Foundation                                  $150,000

Charitable contributions received                                       225,000

Expenses in carrying out its exempt mission                         300,000

Net income before taxes of Concrete Pour, Inc., a

            Wholly owned for-profit subsidiary                         85,000

Concrete Pour, Inc. remits all of its after-tax profits   each year to Repair Habitat. Calculate the amount of Federal income tax, if any, for Repair Habitat and for Concrete Pour.  Show your calculation in good form.

 Problem.2 State Modifications

Citrine Corporation is subject to a corporate income tax only in State X.  The starting point in computing X taxable income is Federal taxable income.  Citrine's Federal taxable income is $400,000, which includes a $55,000 deduction for state income taxes.  During the year, Citrine received $150,000 interest on Federal obligations and $65,000 of interest on State Z obligations.  X does not allow a deduction for state income tax payments, but it does exclude interest earned on its own obligations.

Required: Prepare a schedule in Good Form that determines Citrine's taxable income for State X purposes.