Candlewood LLC started business on September 1, and it adopted a calendar tax year. During the year,Candlewood incurred $6,500 in legal fees for drafting the LLC's operating agreement and $3,000 in accountingfees for tax advice of an organizational nature, for a total of $9,500 of organizational costs. Candlewood alsoincurred $30,000 of preopening advertising expenses and $24,500 of salaries and training costs for newemployees before opening for business, for a total of $54,500 of startup costs. The LLC wants to take the largestdeduction available for these costs.If required, round any division to six decimal places and use in subsequent computations. Roundyour final answers to the nearest dollar.How much can Candlewood deduct as organizational expenses? As startup expenses?The LLC may deduct $expenses.X as organizational expenses and $as startup

Step 1: Computation of Organizational Expenses. The first $5,000 of the total $9,500 incurred as…

Answered: Candlewood LLC started business on…

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter11: The Corporate Income Tax

Section: Chapter Questions

Problem 11MCQ

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Grevilla Corporation is a manufacturing company. The corporation has accumulated earnings of $950,000, and it can establish reasonable needs for $400,000 of that amount. Calculate the amount of the accumulated earnings tax (if any) that Grevilla Corporation is subject to for this year. $_____________
In the current year, Madison Corporation had 50,000 of taxable income at a tax rate of 25%. During the year, Madison began offering warranties on its products and has a Warranty liability for financial reporting purposes of 5,000 at the end of the year. Warranty expenses are not deductible until paid for income tax purposes. Prepare the journal entry to record Madisons income taxes at the end of the year.
Candlewood LLC started business on September 1, 2020 and adopted a calendar year. During 2021, Candlewood incurred $6,500 in legal fees for drafting the LLC's operating agreement and $3,000 in accounting fees for tax advice of an organizational nature, for a total of $9,500 of organizational costs. Candlewood also incurred $30,000 of preopening advertising expenses and $24,500 of salaries and training costs for new employees before opening for business, for a total of $54,500 of startup costs. The LLC wants to take the largest deduction available for these costs. If required, round any division to five decimal places and use in subsequent computations. Round your final answers to the nearest dollar. In 2020, the LLC may deduct $fill in the blank 1 as organizational expenses and $fill in the blank 2 as startup expenses.
Candlewood LLC started business on December 1, and it adopted a calendar tax year. During the year, Candlewood incurred $10,750 in legal fees for drafting the LLC's operating agreement and $5,375 in accounting fees for tax advice of an organizational nature, for a total of $16,125 of organizational costs. Candlewood also incurred $26,000 of preopening advertising expenses and $27,800 of salaries and training costs for new employees before opening for business, for a total of $53,800 of startup costs. The LLC wants to take the larges deduction available for these costs. If required, round any division to six decimal places and use in subsequent computations. Round your final answers to the nearest dollar. How much can Candlewood deduct as organizational expenses? As startup expenses? The LLC may deduct $ X as organizational expenses and $ as startup expenses.
Candlewood LLC started business on July 1, and it adopted a calendar tax year. During the year, Candlewood incurred $7,600 in legal fees for drafting the LLC's operating agreement and $3,800 in accounting fees for tax advice of an organizational nature, for a total of $11,400 of organizational costs. Candlewood also incurred $22,000 of preopening advertising expenses and $31,000 of salaries and training costs for new employees before opening for business, for a total of $53,000 of startup costs. The LLC wants to take the largest deduction available for these costs. If required, round any division to six decimal places and use in subsequent computations. Round your final answers to the nearest dollar. How much can Candlewood deduct as organizational expenses? As startup expenses? The LLC may deduct $ 5,192 X as organizational expenses and $ 3,530 X as startup expenses.
Candlewood LLC began its business on July 1, 2020; and it uses a calendar tax and an accounting year. Candlewood incurred $14,700 in legal fees for drafting the LLC's operating agreement and $7,350 in accounting fees for tax advice of an organizational nature, for a total of $22,050 of organizational costs. Candlewood also incurred $33,000 of preopening advertising expenses and $21,200 of salaries and training costs for new employees before opening for business, for a total of $54,200 of startup costs. The LLC desires to take the largest deduction available for these costs. If required, round any division to six decimal places and use in subsequent computations. Round your final answers to the nearest dollar. Compute Candlewood's deductions for the first year of its operations for: a. Organizational expenses: $ 6,137 X b. Startup expenses: 4,360 X
EFG, a calendar year, accrual basis corporation, reported $479,900 net income after tax on its financial statements prepared in accordance with GAAP. The corporation’s financial records reveal the following information: EFG earned $10,700 on an investment in tax-exempt municipal bonds. EFG’s allowance for bad debts as of January 1 was $21,000. Write-offs for the year totaled $4,400, while the addition to the allowance was $3,700. The allowance as of December 31 was $20,300. On August 7, EFG paid a $6,000 fine to a municipal government for a violation of a local zoning ordinance. EFG’s depreciation expense per books was $44,200, and its MACRS depreciation deduction was $31,000. This is EFG’s second taxable year. In its first taxable year, it recognized an $8,800 net capital loss. This year, it recognized a $31,000 Section 1231 gain on the sale of equipment. This was EFG’s only disposition of noninventory assets. In its first taxable year, EFG capitalized $6,900 organizational costs…
Beech Corporation, an accrual-basis, calendar-year taxpayer, was organized and began business in June of the current calendar tax year. During the current year, the corporation incurred the following expenses: State feeds for incorporation $775 legal and accounting fees incedent to organization 2,713 Expenses for the sale of stock 3,100 Organizational meeting expenses 3,294 Assuming that Beech Corporation wishes to deduct organizational expenses as quickly as possible, calculate the corporation’s deduction for its current calendar tax year.
Beech Corporation, an accrual basis calendar year taxpayer, was organized and began business on July 1st of the current calendar tax year. During the current year, the corporation incurred the following expenses: State fees for incorporation $ 2,545 Legal and accounting fees incident to organization 8,908 Expenses for the sale of stock 10,180 Organizational meeting expenses 3,818 Assuming that Beech Corporation does not elect to expense but chooses to amortize organizational expenditures over 15 years, calculate the corporation's deduction for its current calendar tax year. Round per month calculation to two decimal places. Round your final answer to the nearest dollar.
EFG, an accrual basis calendar year corporation, reported $742,000 net income before tax on its financial statements prepared in accordance with GAAP. EFG’s records reveal the following information: The allowance for bad debts as of January 1 was $79,000. Write-offs for the year totaled $14,800, and the addition to the allowance for the year was $12,800. The allowance as of December 31 was $77,000. EFG paid a $25,970 fine to the state of Delaware for a violation of state pollution control laws. EFG was sued by a consumers' group for engaging in false advertising practices. Although EFG’s lawyers are convinced that the suit is frivolous, its independent auditors insisted on establishing a $74,200 allowance for contingent legal liability and reporting a $74,200 accrued expense on the income statement. EFG received a $244,860 advanced payment for 10,000 units of inventory on October 20. EFG reported the payment as revenue the following February when the units were shipped.
Hunter Company had a FUTA taxable payroll of $192,700 for the year. Since the company is located in a state that has 1.5% FUTA credit reduction due to unpaid loans, determine Hunter's FUTA tax liability for the year.
Golf Corp (GC), a calendar-year, accrual method corporation, held its directors’ meeting on December 15 of year 1. During the meeting, the board of directors authorized GC to pay a $75,000 charitable contribution to the World Golf Foundation, a quality charity. If GC actually pays $50,000 of this contribution on Jan 15 of yar 2 and remaining $25,000 on or before April 15 of year 2, what book-tax difference will it report associated with the contribution in year 1 (ASSUME THE 10 PRCENT LIMITATION DOES NOT APPLY)? Is it favorable or unfavorable? Is it permanent or temporary? Assume the same facts as in part (a) what book tac difference will GC report in year 2 (ASSUME THE 10 PRCENT LIMITATION DOES NOT APPLY)? Is it favorable or unfavorable? If GC actually pays $50,000 of this contribution on Jan 15 of yar 2 and remaining $25,000 on May 15 of year 2, what book-tax difference will it report associated with the contribution in year 1 (ASSUME THE 10 PRCENT LIMITATION DOES NOT APPLY)? Is it…

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