Q. Solve the below application problems Note: Please no copy from the textbook A

Question

Q. Solve the below application problems

Note: Please no copy from the textbook

A.

Hallick, a Michigan corporation, operates two facilities for the manufacture of tangible goods, one facility is located in Michigan and the other is located in Canada. In 2013, Hallick earned the following net income from these facilities. MichiganCanada Gross receipts from sales $1,978,000 $ 1,642,000 Cost of goods sold 1,233,000)1,001,000) Gross manufacturing profit 745,000 641,000 Other deductible expenses(316,000) (298,000) Net income $ 429,000 343,000 Hallick's total compensation paid to its U.S. workforce was $635,000, and total compensation paid to its Canadian workforce was $409,000. In addition to its manufacturing income, Hallick earned $39,400 taxable investment income in 2013.

Explanation / Answer

A.

B.:

Michigen Production Activity Income

Michigen Production Activity Income 429000 Canadian Production Activity Income 343000 Investment income of Hallick 39400 Total Income 811400 Michigen Production Activity Deduction 38610 9% of 429000 Hence Hallick Taxable Income 772790 Limit of 50% of US wages 317500 (635000*50%) is not applicable since basic deduction of 38610 is less than limit

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