Reference no: EM13502559

The local Episcopal Church operates a retail shop.  The inventory consists of the typical items sold by commercial gift shop sales are to tourists and 20% are to church members.  The net income of the gift shop, before the salaries of the three gift shop employees and any Federal income tax is $300,000.  The salaries of the employees total $80,000.

What is the tax liability for the church?______________________________

 Problem 1. Feeder Organization Calculation

Repair Habitat Inc., a § 501(c)(3) organization, receives the following revenues and incurs the following expenses.

Grant from Habitat for All Foundation                                  $150,000

Charitable contributions received                                            225,000

Expenses in carrying out its exempt mission                           300,000

Net income before taxes of Concrete Pour, Inc., a

Wholly owned for-profit subsidiary                              85,000

Concrete Pour, Inc. remits all of its after-tax profits   each year to Repair Habitat.  Calculate the amount of Federal income tax, if any, for Repair Habitat and for Concrete Pour.  Show your calculation in good form.

 Problem. 2 State Modifications

Citrine Corporation is subject to a corporate income tax only in State X.  The starting point in computing X taxable income is Federal taxable income.  Citrine's Federal taxable income is $400,000, which includes a $55,000 deduction for state income taxes.  During the year, Citrine received $150,000 interest on Federal obligations and $65,000 of interest on State Z obligations.  X does not allow a deduction for state income tax payments, but it does exclude interest earned on its own obligations.

Required:  Prepare a schedule in Good Form that determines Citrine's taxable income for State X purposes.  All items should be labeled.