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11 September, 15:20

A corporation in 2018 expects a gross income of $475,000 , total operating expenses of $350,000 , and capital investments of $25,000. In addition the corporation is able to declare $52,000 of depreciation charges for the year. The federal income tax rate is 21 %. What is the expected taxable income and total federal income taxes owed for the year 2018?

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  1. 11 September, 15:25
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    Expected Taxable Income: $73,000

    Expected Taxes Owed: $15,330

    Explanation:

    Expected Income $475,000

    Less:

    Operating Expenses $350,000

    Depreciation charge $52,000

    Taxable Income $73,000 ($475,000 - $350,000 - $52,000)

    Tax $15,330 (21% tax x $73,000 taxable income)

    Net income $57,670 ($73,000 taxable income - $15,330 income tax)

    Note: The capital investment is an asset and will have no effect on the income statement
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