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Acct553 Week 5 Homework

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ACCT553
Week 5 Homework
_________________________________________________________
Please provide your answer to each question in the space provided below.
When finished, submit to the DropBox.

Don't forget you also have a "Homework ES" due this week that you will complete under the Week 5 tab and you can take it over and over again during the week until you earn 8/8 MC's - don't forget you 'must' re-submit your essay responses EACH time!

Chapter 14
1. Please explain how Charitable Contributions come into play in determining "Corporate" taxable income. (5 pts)
Corporate gross income is firstly computed by summing up company’s gross income from sales and domestic dividends received.
Subtract deductible expenses and NOL carryover from the corporate gross income and come up “adjusted taxable income.”
The charitable contributions cannot exceed 10% of adjusted taxable income. Thus, the charitable contribution allowed in the current tax year is computed by adjusted taxable income x 10%.
If the total charitable contribution exceeds 10% of adjusted taxable income, the difference will have to be carried over to the next tax year.
2. What happens to a loss on the Corporate Tax Return (Form 1120)? Does it pass through to the shareholders? Is it available for future or past periods? Please explain in detail. (5 pts.) Corporations can file capital loss when a loss incurred on the tax return. Corporate taxpayers can only claim capital loss to offset against capital gains. Net capital losses of a corporation can be carried back to 3 proceeding years to offset the capital gains claimed in those years. If some capital losses remain, it can be preceding forward for 5 tax years. Proceeding order must be in the 3rd, the 2nd, and then the 1st preceding tax years in order. Unused losses at the end of the 5-year carryforward will be lost forever. Lastly, all…...

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