The company FPA has the following income expense and loss it

The company FPA has the following income, expense, and loss items for the current year.

Sales $850,000
Tax-exempt interest $40,000
Long-term capital gain $85,000
Short-term capital loss $35,000
Passive activity loss $20,000
Cost of goods sold $480,000
Depreciation $40,000
Section 179 expense $50,000
Other operating expenses $200,000
Net operating loss (from previous year) $24,000

Prepare a calculation of taxable income for the following scenarios and indicate the tax form(s) to report the business activity: Corporation Owned by Kim

Solution

Corporation Computation of taxable Income Amount in $ Sales 850000 Less: Cost of goods sold -480000 Gross profit 370000 Other incomes Long term capital gain 85000 Gross income 455000 Less: Deductions depreciation -40000 Taxable Income before special Deductions 415000 Minus: Special deductions Other Operating Expenses -200000 Net Operating Loss (from previous year) -24000 Taxable Income 191000 for Corporation , Form 1120 is used for Income tax Return to report incomes , gains, Losses , Deductoins , credits and Compute the tax Liability