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.