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. Flint’s Federal taxable income is $750,000, which 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:

Answer 1

$790,000

Step-by-step explanation:

Given that

Federal Taxable income = $750,000

Add: Deduction for state income taxes = $50,000

Less: Interest on federal obligations = $10,000

The computation of taxable income for X purposes is shown below:-

Taxable income = Federal Taxable income + Deduction for state income taxes - Interest on federal obligations

= $750,000 + $50,000 - $10,000

= $790,000