Case Study Of Pace Corporation's Taxable Income
1. Pace Corporation's taxable income:
Gross profits $120,000
Dividends (more than 20%-owned corporations) 30,000
Gross income $150,000
Minus: Operating expenses ( 65,000)
Adjusted taxable income $ 85,000
Minus: Charitable contribution deduction (0.10 x $85,000) ( 8,500) $ 76,500
Minus: Dividends-received deduction (0.80 x $30,000) ( 24,000)
Taxable income $ 52,500
Pace Corporation's regular tax liability:
$50,000 x 0.15 = $ 7,500
$2,500 x 0.25 = 625
Regular tax liability $ 8,125
2. Pace Corporation has a $1,500 ($10,000 - $8,500) charitable contribution carryover to the next five years. Pace also has a
Gross profits $120,000
Dividends (more than 20%-owned corporations) 30,000
Gross income $150,000
Minus: Operating expenses ( 65,000)
Adjusted taxable income $ 85,000
Minus: Charitable contribution deduction (0.10 x $85,000) ( 8,500) $ 76,500
Minus: Dividends-received deduction (0.80 x $30,000) ( 24,000)
Taxable income $ 52,500
Pace Corporation's regular tax liability:
$50,000 x 0.15 = $ 7,500
$2,500 x 0.25 = 625
Regular tax liability $ 8,125
2. Pace Corporation has a $1,500 ($10,000 - $8,500) charitable contribution carryover to the next five years. Pace also has a