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In the current year, Sunset Corporation (a C corporation) had operating income of $200,000 and operating...

In the current year, Sunset Corporation (a C corporation) had operating income of $200,000 and operating expenses of $175,000. In addition, Sunset had a $30,000 long-term capital gain, a $52,000 short-term capital loss, and $5,000 tax-exempt interest income. What is Sunset Corporation’s taxable income for the year?

a. $0

b. $3,000

c. $22,000

d. $30,000

e. None of the above

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Answer #1

Answer : "E" : None of the above

Reason : The correct answer for Corporation's taxable income for the year is $25,000 which is calculated as follows :

1. Operating income - expenses = 200,000$-175,000$ = 25,000$

2. Long- term Capital gain - Short term capital loss available for set-off = 30,000$ - 52,000$ = 0$, 22,000$ short term capital loss to be carried forward.

3. 5000$ interest income is exempt and hence not to be included in taxable income

Hence total taxable income = 25,000$.

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