Reference no: EM131881703
Question: 1. Interior Decorators has a gross income of $200,000, deductions totaling $80,000, and tax credits totaling $25,000. What is its taxable income?
2. During its tax year, Kantz Inc. receives a loan for $100,000 and sells for $70,000 equipment with an adjusted basis of $60,000. Based on these facts, what is the company's gross income for the year?
3. Real Property Development Inc. receives $100,000 in rentals from one of its apartment buildings. During the same year, it pays $10,000 in real property taxes, $1,000 for repairs, and $20,000 in interest on a mortgage loan for the apartment building. Based on these facts, what amount must the company include in its gross income?
4. A corporation has $400,000 of gross income. $200,000 of deductions and $30,000 of credits. How much regular income tax does it owe?
5. Gonzolas, Inc. owns 35 percent of the stock in a corporation. During the year, Gonzolas receives dividends totaling $85,000 from the corporation. It's only other items of gross income and deductions are sales revenue of $120,000 and business expenses of $95,000.
a. What are its dividends received deduction and its taxable income for the year?
b. How would you answer differently if Gonzolas owned 80 percent of the corporation's stock?
Discussion Question: What types of businesses pay federal income taxes? If a business does not have to pay federal income tax on its earnings, who, if anyone, does?
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