Question

Azure, a C corporation, reports the following: Pretax book income is $543,000. Depreciation on the tax return is $20,000 greater than depreciation on the financial statements. Rent income reportable on the tax return is $36,000 greater than rent income per the financial statements. Fines for pollution appear as a $10,000 expense in the financial statements. Interest earned on municipal bonds is $25,000. What is Azure's taxable income

Answer 1

Azure's taxable income is $544,000.

Step-by-step explanation:

This can be calculated as follows:

Taxable income = Pretax book income - Excess depreciation + Prepaid rental income + Fines for pollution - Municipal interest income ………………… (1)

Substituting all the relevant values into equation (1), we have:

Taxable income = $543,000 - $20,000 + $36,000 + $10,000 - $25,000 = $544,000

Therefore, Azure's taxable income is $544,000.