Question

In the current year, Riflebird Company had operating income of $220,000, operating expenses of $175,000, and a long-term capital loss of $10,000. How do Riflebird Company and Roger, the sole owner of Riflebird, report this information on their respective Federal income tax returns for the current year under the following assumptions? Riflebird Company is a proprietorship (Roger did not make any withdrawals from the business). Riflebird Company is a C Corporation (no dividends were paid during the year).

Answer 1

Answer and Explanation:

In the case of proprietorship

net profit is

= Operating income - operating expenses

= $220,000 - $175,000

= $45,000

Since the long term capital loss is given i.e. $10,000 so the same is to be considered

In the case of C Corporation

Since no dividend is paid so here the net profit and the long term capital loss would be zero