Question

Flint Corporation is subject to a corporate income tax only in State X. The starting point in computing X taxable income is Federal taxable income which is $750,000. This amount includes a $50,000 deduction for state income taxes. During the year, Flint received $10,000 interest on Federal obligations. X tax law does not allow a deduction for state income tax payments. ​Flint’s taxable income for X purposes is:_________

a. $800,000.
b. $790,000.
c. $810,000.
d. $750,000.

Answer 1

b. $790,000.

Step-by-step explanation:

The computation of the taxable income for X purpose is shown below:

Federal Taxable income $750,000

Add: Deduction for state income taxes non-deductible $50,000

Less: Interest on federal obligations i.e. deductible $10,000

Taxable income $790,000

Hence, option b is correct