ms. In 2021, SHE had provided you, its CPA, with the following information ab activities: ross profit from sales of home entertainment systems $475,000 (no book-tax fferences). ividends SHE received from a 21 percent-owned corporation of $137,000. SHI quity method of accounting this minority-owned subsidiary and this also repre o rata share of the corporation's earnings. xpenses other than the dividend received deduction (DRD), charitable contrib nd net operating loss (NOL), are $339,000. HE's tax depreciation exceeded book depreciation by $18,500 OL carryover from prior year of $17,000. HE's book federal income tax expense is $57,000.
ms. In 2021, SHE had provided you, its CPA, with the following information ab activities: ross profit from sales of home entertainment systems $475,000 (no book-tax fferences). ividends SHE received from a 21 percent-owned corporation of $137,000. SHI quity method of accounting this minority-owned subsidiary and this also repre o rata share of the corporation's earnings. xpenses other than the dividend received deduction (DRD), charitable contrib nd net operating loss (NOL), are $339,000. HE's tax depreciation exceeded book depreciation by $18,500 OL carryover from prior year of $17,000. HE's book federal income tax expense is $57,000.
Chapter18: Accounting Periods And Methods
Section: Chapter Questions
Problem 3DQ
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Transcribed Image Text:Sariah's Home Entertainment LLC ("SHE LLC") is a company that sells in-home entertainment
systems. In 2021, SHE had provided you, its CPA, with the following information about its
2021 activities:
▪ Gross profit from sales of home entertainment systems $475,000 (no book-tax
differences).
▪ Dividends SHE received from a 21 percent-owned corporation of $137,000. SHE uses the
equity method of accounting this minority-owned subsidiary and this also represents its
pro rata share of the corporation's earnings.
▪ Expenses other than the dividend received deduction (DRD), charitable contribution (CC)
and net operating loss (NOL), are $339,000.
▪ SHE's tax depreciation exceeded book depreciation by $18,500
▪ NOL carryover from prior year of $17,000.
▪ SHE's book federal income tax expense is $57,000.
1. What is SHE's book net income?
2. What is SHE's modified DRD taxable income?
3. What is SHE'S DRD?
4. What is SHE's taxable income after the NOL carryover and the DRD?
5. What is SHE's taxable income on Schedule M-1?
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