Question

The company FPA has the following income, expense, and loss items for the current year.

Sales $850,000
Tax-exempt interest $40,000
Long-term capital gain $85,000
Short-term capital loss $35,000
Passive activity loss $20,000
Cost of goods sold $480,000
Depreciation $40,000
Section 179 expense $50,000
Other operating expenses $200,000
Net operating loss (from previous year) $24,000

Prepare a calculation of taxable income for the following scenarios and indicate the tax form(s) to report the business activity: Corporation Owned by Kim

Answer 1

Corporation
Computation of taxable Income
	Amount in $
Sales	850000
Less: Cost of goods sold	-480000
Gross profit	370000
Other incomes
Long term capital gain	85000
Gross income	455000
Less: Deductions
depreciation	-40000
Taxable Income before special Deductions	415000
Minus: Special deductions
Other Operating Expenses	-200000
Net Operating Loss (from previous year)	-24000
Taxable Income	191000
for Corporation , Form 1120 is used for Income tax Return to report incomes , gains, Losses , Deductoins , credits and Compute the tax Liability