Question

Bud Corp. had book income (net) of $1,000,000 this year. The corporation's federal income tax expense was $200,000. This year, the corporation purchased and placed in service a depreciable asset. The asset cost $60,000. For book purposes, depreciation this year was $20,000 (already included in the calculation of $1,000,000 book income). For tax purposes, the corporation elected bonus depreciation for the asset. What is the corporation's taxable income for this year?

Answer 1

$960,000

Step-by-step explanation:

Calculation to determine the corporation's taxable income for this year

Using this formula

Taxable income=Book income+Depreciation Expense-Asset

Let plug in the formula

Taxable income=$1,000,000+$20,000-$60,000

Taxable income=$960,000

Therefore the corporation's taxable income for this year is $960,000