Question

Question 73 of 75 Dawson's Inc. paid the following expenses during 2018 (calendar year entity): • Officer's compensation was 575,000, paid to Ms. Dawson who devotes 100% of her time to the business. All other salaries were associated with Cost of Goods Sold labor. • The company purchased their office building for $125,000 on April 15, 2017. The company paid bank charges of 56,757 for the year, and interest expense of $4,718 (not limited) • Deductible sales taxes totaled $21,000. . During the year, Dawson's Inc, contributed $5,000 to various charitable organizations Other business deductions consist of: • $12,000 for advertising. • $4,000 insurance. • $5,000 licenses. • $1,500 legal and professional • $3,200 utilities. • $1,000 office supplies. What are the total deductions to be reported on Form 1120, line 27? O $137,662 $139,175 $142,380 $145,585

Answer 1

The answer will be 142,380. The calculation is given as under :

75,000	Salaries
6,757	Bank Charges
4,718	Interest Expenses
12,000	Advertising
4,000	Insurance
5,000	Licenses
1,500	Legal and professional
3,200	Utilities
1,000	Office Supplies
21,000	Sales tax deduction
5,000	Charitable contribution
3,205	Depreciation
142,380	Total

Line no.27 of form 1120 is summation of all busiess expenses including charitable contribution and depreciation as well.

Office building has a life of 39 years and straight line basis depreciation calculated is as under :

=125000/39 = 3205 per year