Radnor Corporation reports the following results for the current year: Gross pro

Question

Radnor Corporation reports the following results for the current year:

Gross profits on sales                                                 $135,000

Long-term capital loss                                                $ 15,000

Short-term capital loss                                                           $ 4,000

Dividends from 60% owned domestic corporation    $20,000

Operating expenses                                                    $ 55,000

Charitable contributions                                             $15,000

What are Radnor’s taxable income and income tax liability?

What carrybacks and carryovers are available?  If any?

Explanation / Answer

Radnor’s taxable income and income tax liability:

Gross profits on sales : $135000$

Less : Operating expenses : $ 55000

Taxable Income : $ 80000

Deductions Available (Charitable contributions) : 15000

Net taxable Income : $65000

Income tax liabitly : tax rate is not given in question.

Note : Dividends from 60% owned domestic corporation $20,000 is exempt from tax as domestic corporation pays dividend distribution tax on the same.

carrybacks and carryovers are available: yes, Long-term capital loss $ 15,000 and Short-term capital loss $ 4,000 can can be carried forward next 8(eight) Assessment Years.

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