Question

Dawson's Inc paid the following expenses during 2018 (calendar year entity): Officer's compensation was $75,000 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 $6757 for the year, and interest expenses of $4, 718(not limited). -Deductible sales taxes totaled $21,000. During the year Dawson Inc. contributed $5000 to various charitable organizations. Other business deductions consist of : $12000 for advertising, $4000 for insurance, $5000 for licenses, $1500 legal and professional, $3200 for utilities, $1000 for office supplies. WHAT ARE THE TOTAL DEDUCTIONS TO BE REPORTED ON FORM 1120, LINE 27?

The answer given on the site of $139,175 is WRONG. I need a step by step answer so I can validate. Thanks

Answer 1

As per the given question,

• $142,380.

  (consisting of all other deduction,compensation expense paid to Ms. Dawson,bank charges and interest expense,sales taxes and contribution in charitable organization)

• all the expenses to run the business are deductible= 75000+6757+4718+21000+5000+12000+4000+5000+1500+3200+1000+3205=$142,380

  On form 1120 under the Deduction section Lines 12-27 Depreciation is listed as an expense and I listed 3205 as straight line 39 year depreciation