Acc 317 Chapter 17 Homework

29. LO.2, 4 In the current year, Tanager Corporation (a C corporation) had operating

income of $480,000 and operating expenses of $390,000. In addition, Tanager had a

long-term capital gain of $55,000 and a short-term capital loss of $40,000.

a. Compute Tanager’s taxable income and tax for the year.

b. Assume, instead, that Tanager’s long-term capital gain was $15,000 (not $55,000).

Compute Tanager’s taxable income and tax for the year.

41. LO.3 Egret Corporation, a calendar year C corporation, was formed on March 7, 2013,

and opened for business on July 1, 2013. After its formation but prior to opening for

business, Egret incurred the following expenditures:

Accounting $ 7,000

Advertising 14,500

Employee payroll 11,000

Rent 8,000

Utilities 1,000

What is the maximum amount of these expenditures that Egret can deduct in 2013?

42. LO.4 In each of the following independent situations, determine the corporation’s

income tax liability. Assume that all corporations use a calendar year for tax purposes

and that the tax year involved is 2013.

Taxable Income

Purple Corporation $ 65,000

Azul Corporation 290,000

Pink Corporation 12,350,000

Turquoise Corporation 19,000,000

Teal Corporation

(a personal service corporation) 130,000

43. LO.5 Red Corporation and White Corporation, both calendar year C corporations, are

members of a controlled group of corporations. For 2013, Red has taxable income of

$130,000, and White has taxable income of $200,000. Assuming that the controlled

group does not make an election regarding the apportionment of the marginal tax

brackets, what is the income tax liability for each of the corporations?

45. LO.6 The following information for 2013 relates to Sparrow Corporation, a calendar

year, accrual method taxpayer.

Net income per books (after-tax) $174,100

Federal income tax expense per books 86,600

Tax-exempt interest income 4,500

MACRS depreciation in excess of straight-line depreciation used for

financial statement purposes 7,200

Excess of capital loss over capital gains 9,400

Nondeductible meals and entertainment 5,500

Interest on loan to purchase tax-exempt bonds 1,100

Based on the above information, use Schedule M–1 of Form 1120, which is available on

the IRS website, to determine Sparrow’s taxable income for 2013.