9-26) Mondial Corporation’s financial accounting records show it had gross reven
ID: 2418626 • Letter: 9
Question
9-26) Mondial Corporation’s financial accounting records show it had gross revenue of $980,000, cost of goods sold of $420,000, operating expenses of $380,000, and $4,000 of dividends received from a 40% owned company. Its operating expenses included the following: $6,000 of life insurance premiums on which it was the beneficiary $22,000 of meals and entertainment expenses $30,000 of charitable contributions a. Determine Mondial Corporation’s taxable income. b. Determine Mondial Corporation’s income tax liability. 0-50,000 15%, 50,001 - 75,000 25%, 75,001 - 100,000 34%, 100,001 - 335,000 39%. 335,001 - 10,000,000 34%.
9-58) June owned all the stock of Corporation A. Over the years, the corpora- tion had been very successful but had never paid any dividends, although it had substantial earnings and profits. June wanted to expand into another line of business as a sole proprietor but did not have the cash to do so. June decided to form B, a new corporation. She contributed all the stock of A to B. B borrowed $100,000 from a bank using A stock as collat- eral. B then distributed all of its stock and the $100,000 to June. How should June treat the distribution of the stock and the $100,00
Explanation / Answer
9-26)
a. Calculation of income tax liability
b. Calculation of tax liability
Gross revenue 980000 Less: Cost of goods sold 420000 Less: Operating expenses 380000 Add: LIC premium 6000 Add: Charitable contribution 30000 Business income 216000 Add: Dividend income 4000 Total taxable income 220000Related Questions
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