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Builtrite had sales of $900,000 and COGS of $280,000. In addition, operating expenses were calculated at...

Builtrite had sales of $900,000 and COGS of $280,000. In addition, operating expenses were calculated at 25% of sales. Builtrite also received dividends of $50,000 and paid out common stock dividends of $25,000 to its stockholders. A long-term capital gain of $70,000 was realized during the year along with a capital loss of $50,000

If Bullrite has experienced a long-term capital loss of 20,000 instead of 50,000 and still had 70,000 lon-term capital gain which of the following is correct?

Taxable income would increase by an additional 10,000

Taxable income would increase by an additional 20,000

Taxable income would increase by an additional 30,000

It would not change

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Answer #1

Long term capital gains= $70000

Long term capital loss = $ 50000

Income from capital gains = $ 20000

As per the question if the LOng term capital losses are $ 20000 instead of $ 50000 then the income from capital capital gains will be $ 50000 which means increase in taxable income by $ 30000 as compared to capital gains $ 20,000 given in the question.

third option has to be selected

Pls do rate, if the answer is correct and comment, if any further assistance is required

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