Charitable Contributions
Response to the following problem:
An accrual basis corporation reports the following income and expenses for 2014. The corporation does not manufacture the merchandise that is sells, and therefore is not entitled to the domestic production activities deduction.
Gross sales and receipts $700,000
Returns and allowances 12,000
Cost of goods sold 330,000
Interest received 20,000
Rent expense 55,000
Wage expense 140,000
Charitable contributions 12,000
Other operating expenses 75,000
Depreciation expense 15,000
a. Compute the corporation's taxable income for the 2014 tax year.
b. What is the amount of the corporation's charitable contribution carryover (if any)? To which tax years can the corporation carry over this excess?