Reference no: EM133163155
Question 1 - For the year ended December 31, 2021, Prunus, Inc., reported net income before federal income tax expense of $800,000 per the corporation's books. This figure included the following items:
Interest income on tax-exempt municipal securities $30,000
Loss on sale of land acquired in 1998 as an investment $40,000
Interest expense on loan to purchase tax-exempt municipal securities $10,000
What is the taxable income of Prunus, Inc. for 2021?
a. $800,000
b. $820,000
c. $830,000
d. $870,000
e. None of these
Question 2 - Which of the following statements is true of corporations in 2021?
a. Income of all corporations is taxed in the same way that income of partnerships is taxed.
b. A corporation's charitable contribution deduction is limited to 10 percent of the corporation's taxable income.
c. Capital losses of a corporation may be deducted from ordinary income, subject to an annual limitation.
d. If a corporation has a long-term capital loss that is carried back, it is treated as a short-term capital loss.
e. A corporation may deduct organizational expenditures as they are incurred.
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