Question

A corporation in 2018 expects a gross income of ​$475,000​, total operating expenses of ​$350,000​, and capital investments of ​$25,000. In addition the corporation is able to declare ​$52,000 of depreciation charges for the year. The federal income tax rate is 21​%. What is the expected taxable income and total federal income taxes owed for the year 2018?

Answer 1

Expected Taxable Income: $73,000

Expected Taxes Owed: $15,330

Step-by-step explanation:

Expected Income $475,000

Less:

Operating Expenses $350,000

Depreciation charge $52,000

Taxable Income $73,000 ($475,000 - $350,000 - $52,000)

Tax $15,330 (21% tax x $73,000 taxable income)

Net income $57,670 ($73,000 taxable income - $15,330 income tax)

Note: The capital investment is an asset and will have no effect on the income statement