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Homework answers / question archive / Determine the corporation's taxable income
Determine the corporation's taxable income. Also, note any carryovers that apply and the terms of the carryovers.
Leonard Corporation paid $19,000 in organizational expenses when it formed at the end of 2019. During the current year (2020), the corporation had the following income and expenses:
Net sales from operations:$450,000
Dividends received (Leonard owned 25% of this corp.):$50,000
Operating expenses: $125,000
In addition, the corporation had the following transactions during the current year:
1) On February 1, the corporation contributed inventory that had been held for two years to a qualified charitable organization. At the time of the contribution, the inventory had a basis of $60,000 and a fair market value of $53,000.
2)On March 1, the corporation sold stock in White Corporation for $300,000. Leonard had purchased these shares in 2017 for $350,000.
3) On June 30, the corporation sold a manufacturing warehouse for $250,000. The warehouse was purchased in 2016 for $240,000 and depreciation of $35,000 was taken.
