Question

Kingbird Corporation (a calendar year C corporation) reports the following income and expenses this year: Income from operations $200,000 Expenses from operations 140,000 Dividends received (15% ownership) 15,000 On October 1, Kingbird Corporation made a contribution to a qualified charitable organization of $9,000 in cash (not included in any of the above items).
Determine Kingbird's charitable contribution deduction.

Answer 1

Answer:

$7,500

Explanation:

Taxable income:

= Income from operations + Dividends received - Expenses from operations

= $200,000 + $15,000 - 140,000

= $75,000

Deductions is allowed only to the maximum extent of 10% of the taxable income of the corporation.

Therefore,

Kingbird's charitable contribution deduction:

= 10% of Taxable income

= 0.1 × $75,000

= $7,500