Problem:
Income:
Gross profit from manufacturing operations ____________________$250,000
Dividends received from %25 -owned domes. corp. ______________ 20,000
Interst Income: Corporate bonds ______________________________ 10,000
Municiple bonds ____________________________________________ 12,000
Proceeds from life insurance policy on key _____________________ 100,000
Employee
Section 1231 gain on sale of land ______________________________ 8,000
Expenses:
Administrative expenses ____________________________________ 110,000
Bad Debts ________________________________________________ 5,000
Depreciation:
Financial accounting__________________________________________68,000 Taxable income _____________________________________________ 86,000 Alternative depreciation system (for E&P) _______________________ 42,000 NOL carryover ______________________________________________ 40,000 Charitable contributions: Current year __________________________ 8,000 Carryover from last year _____________________________________ 3,500 Capital loss on sale of stock __________________________________ 1,200 US production activities deduction ____________________________ 1,500 Penalty on late payment of federal taxes _______________________ 450
a. What is Beach's taxable income and current E&P?