29. LO.2, 4 In the current year, Tanager Corporation (a C corporation) had operating
income of $480,000 and operating expenses of $390,000. In addition, Tanager had a
long-term capital gain of $55,000 and a short-term capital loss of $40,000.
a. Compute Tanagerâ€™s taxable income and tax for the year.
b. Assume, instead, that Tanagerâ€™s long-term capital gain was $15,000 (not $55,000).
Compute Tanagerâ€™s taxable income and tax for the year.
41. LO.3 Egret Corporation, a calendar year C corporation, was formed on March 7, 2013,
and opened for business on July 1, 2013. After its formation but prior to opening for
business, Egret incurred the following expenditures:
Accounting $ 7,000
Employee payroll 11,000
What is the maximum amount of these expenditures that Egret can deduct in 2013?
42. LO.4 In each of the following independent situations, determine the corporationâ€™s
income tax liability. Assume that all corporations use a calendar year for tax purposes
and that the tax year involved is 2013.
Purple Corporation $ 65,000
Azul Corporation 290,000
Pink Corporation 12,350,000
Turquoise Corporation 19,000,000
(a personal service corporation) 130,000
43. LO.5 Red Corporation and White Corporation, both calendar year C corporations, are
members of a controlled group of corporations. For 2013, Red has taxable income of
$130,000, and White has taxable income of $200,000. Assuming that the controlled
group does not make an election regarding the apportionment of the marginal tax
brackets, what is the income tax liability for each of the corporations?
45. LO.6 The following information for 2013 relates to Sparrow Corporation, a calendar
year, accrual method taxpayer.
Net income per books (after-tax) $174,100
Federal income tax expense per books 86,600
Tax-exempt interest income 4,500
MACRS depreciation in excess of straight-line depreciation used for
financial statement purposes 7,200
Excess of capital loss over capital gains 9,400
Nondeductible meals and entertainment 5,500
Interest on loan to purchase tax-exempt bonds 1,100
Based on the above information, use Schedule Mâ€“1 of Form 1120, which is available on
the IRS website, to determine Sparrowâ€™s taxable income for 2013.