Raptor Corporation is a PHC for 2019 and reports the following items: Operating profit &
Raptor Corporation is a PHC for 2019 and reports the following items:
Operating profit $300,000
Which does not include:
Long-term capital gain 180,000
Dividends received (25%-owned corporation) 190,000
Interest 200,000
Gross income ?
Salaries expense (150,000)
General and administrative expense (15,000)
Dividends-received deduction (?)
Taxable income ?
Regular tax liability ?
What is the PHC tax for Raptor assuming they pay no dividends to their shareholders?
This is the way the question is asked. Can you please help me understand how to solve?
Homework Answers
Operating profit = $300,000
Which does not include:
Long-term capital gain = 180,000
Dividends received (25%-owned corporation) = 190,000
Interest = 200,000
Gross income 300000+180000+190000+200000 = 870,000
Salaries expense (150,000)
General and administrative expense (15,000)
Dividends-received deduction 190000 - (190000*25%) = 142500
Taxable income 870000 - (150000+15000+142500) = 562500
*Regular tax liability = 202,625
Calculation of regular Tax
Tax on first $100,000 of taxable income = $ 22,250
Tax on remaining taxable income ($462500×0.39) = $180,375
Income tax liability = $ 202,625
What is the PHC tax for Raptor assuming they pay no dividends to their shareholders?
Answer :
Taxable income = 657,500
Less: federal tax = (202,625)
Less: Net capital gain (net of taxes)* = (109,800)
Plus DRD = 142,500
PHCI = 487,575
PHC Tax (0.20 tax rate×487,575) = 97,515
(* 180,000-(180,000 * 0.39) = 109,800)
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Raptor Corporation is a PHC for 2019 and reports the following
items:
Operating
profit &
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