Midterm Summer 2018 SAMPLE MULTIPLE CHOICE Multiple Choice Please circle the bes

Question

Midterm Summer 2018 SAMPLE MULTIPLE CHOICE Multiple Choice Please circle the best answer and fill in on your scantron. 1. ABC Corporation's activity for the current year is shown below. What is ABC's taxable income or NOL for the year? -Sales $100,000 $35,000- $95,000- $20,000 Operating expenses . Dividends from D Corp. (ABC owns 5%) te with GHI$60,000 Dividends from Corp. (ABC owns 25%)- Cash contribution to charitya $50,000 $52,000. a.-S(24,000) NOI b.. $(18,000) NOL $(14,000) NOL d. $(144,000) NOL

Explanation / Answer

Answer is (b) (18000) NOL calculations: sales 100000 cogs -35000 operating expenses -95000 Dividends from D 20000 Dividends from G 60000 Dividends from J 50000 taxable income 100000 less : contribution to charity -10000 10 %of 100000 (taxable income) 90000 less drd of dividends from D -20000 complete 20000 as it created an NOL less drd of dividends from G -48000 60000*80%, as they do not consolidate drd = dividends received deduction less drd of dividends from J -40000 50000*80% NOL -18000

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