Question

4. Your company was formed to develop virus killing soap during the pandemic. You bought land for $300,000, had a $1,000,000 factory building erected, and installed $500,500 worth of soap research formulation and experimental equipment. The facility was finished on March 1, and the government paid you $500,000 for the virus killing soap. Supplies and operating expenses excluding the capital expenditures were $100,000.

Using MACRS GDS depreciation:

1. What is the first-year taxable income?

2. How much will your corporation pay in Federal income taxes for the first year?

Answer 1