with GAAP. The corporation’s records reveal the following information: SEP incurred $75,000 of domestic research costs that resulted in a new 17-year patent for the corporation. SEP expensed these costs for book purposes. SEP’s depreciation expense per books was $98,222, and its MACRS depreciation deduction was $120,000. SEP was organized two years ago. For its first taxable year, it capitalized $27,480 start-up costs and elected to amortize them over 180 mont
with GAAP. The corporation’s records reveal the following information: SEP incurred $75,000 of domestic research costs that resulted in a new 17-year patent for the corporation. SEP expensed these costs for book purposes. SEP’s depreciation expense per books was $98,222, and its MACRS depreciation deduction was $120,000. SEP was organized two years ago. For its first taxable year, it capitalized $27,480 start-up costs and elected to amortize them over 180 mont
Chapter20: Corporations And Parterships
Section: Chapter Questions
Problem 45P
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Question
EP, a calendar year corporation, reported $918,000 net income before tax on its current year financial statements prepared in accordance with GAAP. The corporation’s records reveal the following information:
- SEP incurred $75,000 of domestic research costs that resulted in a new 17-year patent for the corporation. SEP expensed these costs for book purposes.
- SEP’s
depreciation expense per books was $98,222, and its MACRS depreciation deduction was $120,000. - SEP was organized two years ago. For its first taxable year, it capitalized $27,480 start-up costs and elected to amortize them over 180 months. For book purposes, it expensed the costs in the year incurred.
Required:
Compute SEP’s taxable income
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