Question

Kristi Corporation, a calendar-year, accrual-basis corporation had net income per the books of $850,000 for the...

Kristi Corporation, a calendar-year, accrual-basis corporation had net income per the books of $850,000 for the

current year. Included in this number were the following items:

                        Federal income taxes                                                    $200,000

                        Interest income on U.S. treasury bonds                          26,000

                        Interest income on municipal bonds                                  22,000

                        Charitable contribution in excess of 10% limitation                 4,000

                        Tax penalty assessed by IRS                                                         1,000

                        Capital loss on sale of land (no other capital asset sales)       3,000

                        Business entertainment expense                                             20,000

MACRS depreciation in excess of book depreciation is $5,000.

Calculate Kristi Corporation's taxable income before special deductions for the current year.

Business   Accounting   
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Answer #1
Particulars Amount
Book income        850,000
Income tax        200,000
Interest on municipal bonds         (22,000)
Non-deductible charity             4,000
Tax penalty             1,000
Capital loss             3,000
Entertainment expense           20,000
Excess depreciation           (5,000)
Taxable income     1,051,000

Answer is:

1,051,000

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