56. Renee operates a proprietorship selling collectibles over the Web. This year, Renee'sbusiness reported revenue of $95.5 million and deducted $88.6 million in expensesand loss carryovers. Her business deductions included cost of goods sold of$48.5 million, sales commissions paid of $16.9 million, $10.5 million of interestpaid on a mortgage, $10.7 million of depreciation, and $2 million deduction for anet operating loss carryover.a) What is Renee's adjusted taxable income for purposes of calculating the limita-tion on business interest expense?b) What is the maximum amount of business interest expense that Renee can deductthis year, and how is the disallowed interest expense (if any) treated?c) Suppose that Renee's revenue includes $5 million of business interest income.What is the maximum amount of business interest expense that could bededucted this year under the business interest limitation?usingen HoweverLO 1-2101-2

Tax is obligatory on any entity’s income. However, accounting profit differs from taxable profits.…

Answered: adjusted taxable income

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter1: Federal Income Taxation—an Overview

Section: Chapter Questions

Problem 55P

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47. In preparing the 2021 Annual Income Tax Return of Nicanor, the following information were culled from his accounting records: Gross sales – Php 2,500,000 Cost of sales – Php 1,000,000 Salaries and wages – Php 100,000 Rent Expense – Php 100,000 Depreciation – Php 100,000 Utilities Expense – Php 100,000 Repairs and Maintenance – Php 100,000 Other income: Rental income – Php 1,000,000 Interest income from bank deposits in Bank of the Pelepens – Php 100,000 Dividends from ABC Corp., a DC – Php 100,000 Cash Prizes – Php 100,000 The duly filed 1st quarterly income tax return indicated that Nicanor opted 8% taxation. In addition, he provided…
Renee operates a proprietorship selling collectibles over the Web, and last year she purchased a building for $24 million for her business. This year, Rene’s proprietorship reported revenue of $95.5 million and incurred total expenses of $88.6 million. Her expenses included cost of goods sold of $48.5 million. Sales commissions paid of $16.9 million. $10.5 million of interest paid on the building mortgage, and $12.7 million of depreciation. What’s Renee’s adjusted taxable income for purposes of calculating the limitation on business interest expense? What is the maximum amount of business interest expense that Renee can deduct this year, and how is the disallowed interest expense (if any) treated? Suppose that Renee’s revenue includes $5 million of business interest income. What is the maximum amount of business interest expense that could be deducted this year under the business interest limitation?
1. John reports the following business transactions: Gross sales - P850,000 Sales discounts - 25,000 Cost of sales - 250,000 Operating expenses - 190,000 Interest income on bank deposits- BPI - 10,000 John also earned a total compensation of P410.020, from a part-time employment of which, P105,000 is excluded from taxation. Compute the taxable income of John which is subject to regular income tax: a. P680,000 b. P690,000 c. P705,000 d. P870,000 2. The negligence of AC, driver of a certain bus company, resulted in the death of JP's wife, physical injuries to JP that prevented him from working for a month, and the total wreck of JP's brand new car which he had bought for P400.000. In the action for damages filed by JP against the bus company, the court awarded the following: • P30,000 for JP's injuries consisting mainly in the loss of his right hand; • P45,000 for JP's loss of one month salary: • P25,000 for the death of his wife: • P100,000 moral damages on account of the…
Jackel, Inc. has the following information for the current tax year: Gross sales $350,000 Cost of goods sold 50,000 Dividends received from 10% owned domestic corporation 40,000 Operating expenses 30,000 Charitable contributions 45,000 What is Jackel's taxable income? Correct Answer should be $259,000
During the year, Irv had the following transactions: Long-term loss on the sale of business use equipment $7,000 Long-term loss on the sale of personal use camper 6,000 Long-term gain on the sale of personal use boat 3,000 Short-term loss on the sale of stock investment 4,000 Long-term loss on the sale of land investment 5,000 How are these transactions handled for income tax purposes?
Zhie reports the following business transactions: Gross sales P840,000 Sales discounts 25,000 Cost of sales 250,000 Operating expenses 190,000 Interest income on bank deposits- BPI 10,000 Zhie also earned a total compensation of P410.020, from a part-time employment of which, P105,000 is excluded from taxation. Compute the taxable income of zhie which is subject to regular income tax:
Trevorson Electronics is a small company privately owned by Jon Trevorson, an electrician whoinstalls wiring in new homes. Because the company’s financial statements are prepared only for taxpurposes, Jon uses the direct write-off method. During 2015, its first year of operations, TrevorsonElectronics sold $30,000 of services on account. The company collected $26,000 of these receivables during the year, and Jon believed that the remaining $4,000 was fully collectible. In 2016,Jon discovered that none of the $4,000 would be collected, so he wrote off the entire amount. Tomake matters worse, Jon sold only $5,000 of services during the year.Required:1. Prepare journal entries to record the transactions in 2015 and 2016.2. Using only the information provided (ignore other operating expenses), prepare comparativeincome statements for 2015 and 2016. Was 2015 really as profitable as indicated by its incomestatement? Was 2016 quite as bad as indicated by its income statement? What should Jon…
Last year, lana purchased a $100,000 account receivable for $90,000. During the current year, Lucy collected $97,000 on the account. What are the tax consequences to Lucy associated with the collection of the account receivable? No subsequent collections are expected. a.$7,000 gain b.$3,000 loss c.$13,000 loss d.$2,000 gain
Vanquish, Incorporated, a C Corporation, had the following items of income and expense during 2021. Gross profit from sales $220,000 Interest income on bank account $3,650 Interest income on State of Missouri Bonds $4,000 [ Long term capital loss on sale of stock $5,000 Wages expense $90,000 Charitable contributions $17,000 Other deductible expenses $57,000 Depreciation – BOOK $10,000 Depreciation – TAX (MACRS) $15,000 Federal income tax credit $2,500 What is Vanquish, Incorporated's tax rate? Solve as we have in class (on your own paper, WORD doc, Excel, etc.) and attach a file showing your work. a) Compute Taxable Income and Tax Due (or Refund) for the Corporation. b) What specific items and amounts from 2021 does the Corporation have to CarryForward? Why?
In preparing the Annual Income Tax Return of Nicanor, the following information were culled from his accounting records: Gross sales – Php 1,500,000 Cost of sales – Php 500,000 Gross Profit – Php 1,000,000 Operating expenses: Depreciation – Php 100,000 Rent Expense – Php 100,000 Repairs and Maintenance – Php 100,000 Salaries and wages – Php 100,000 Utilities Expense – Php 100,000 Other income: Cash Prizes – Php 100,000 Dividends from ABC Corp. – Php 100,000 Interest income from bank deposits – Php 100,000 Rental income – Php 1,000,000 In addition, you learned that Nicanor intends to sell a residential house and lot which he inherited from his father and 1,000 shares of stocks in a domestic corporation which were sold by her mother to him in the amount of Php 1 Million. He provided you the information the following: Real property classified as capital asset: Zonal value of lot – Php 5 Million Assessor’s fair value of lot – Php 4 Million Assessor’s fair value of house – Php 5 Million…
In preparing the Annual Income Tax Return of Nicanor, the following information were culled from his accounting records: Gross sales – Php 1,500,000 Cost of sales – Php 500,000 Gross Profit – Php 1,000,000 Operating expenses: Depreciation – Php 100,000 Rent Expense – Php 100,000 Repairs and Maintenance – Php 100,000 Salaries and wages – Php 100,000 Utilities Expense – Php 100,000 Other income: Cash Prizes – Php 100,000 Dividends from ABC Corp. – Php 100,000 Interest income from bank deposits – Php 100,000 Rental income – Php 1,000,000 In addition, you learned that Nicanor intends to sell a residential house and lot which he inherited from his father and 1,000 shares of stocks in a domestic corporation which were sold by her mother to him in the amount of Php 1 Million. He provided you the…
In preparing the Annual Income Tax Return of Nicanor, the following information were culled from his accounting records: Gross sales – Php 1,500,000 Cost of sales – Php 500,000 Gross Profit – Php 1,000,000 Operating expenses: Depreciation – Php 100,000 Rent Expense – Php 100,000 Repairs and Maintenance – Php 100,000 Salaries and wages – Php 100,000 Utilities Expense – Php 100,000 Other income: Cash Prizes – Php 100,000 Dividends from ABC Corp. – Php 100,000 Interest income from bank deposits – Php 100,000 Rental income – Php 1,000,000 In addition, you learned that Nicanor intends to sell a residential house and lot which he inherited from his father and 1,000 shares of stocks in a domestic corporation which were sold by her mother to him in the amount of Php 1 Million. He provided you the…

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