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zavuch27 [327]
3 years ago
5

In the current year, Norris, an individual, has $52,000 of ordinary income, a net short-term Capital loss (NSTCL) of $9,800 and

a net long-term capital gain (NLTCG) of $2,900. From his capital gains and losses, Norris reports:
Business
1 answer:
Tanya [424]3 years ago
3 0

Answer:

The answer is an offset against normal income of $3,000 and a NSTCL move forward of $3,900.

Explanation:

Solution

Given that:

The net short term capital loss=$9800

The net Long term capital gain=$2900

The net short term capital loss is =$6900

Thus

In this case, 3000 is allowed to be set off against ordinary income and the balance of (6900 - 3000) = 3900 can be moved forward or over.

Therefore Norris report implies that an offset against normal income of $3,000 and a NSTCL carry forward of $3,900.

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We must understand that in the end of the life of a bond(maturity), the value should always match the face value thus, the difference in bond market price arise from coupon payment.

If a bonds coupon payment is 40 dollars while another bond coupon payment  is 80 dollars the present value of the second will be more influenced from the interest rate as there are more dollars in the future to discount.

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2 years ago
Crain Company has a manufacturing subsidiary in Singapore that produces high-end exercise equipment for U.S. consumers. The manu
Dovator [93]

Answer:

Crain Company's total taxes would decrease by $64,740

Explanation:

the income statement for the parent company:

total revenue $2,490,000

- COGS          ($1,490,000)

<u>- S&A costs     ($390,000)</u>

EBIT                   $610,000

<u>- taxes              ($201,300)</u>

net income       $408,700

the income statement for the subsidiary:

total revenue $3,490,000

- COGS          ($2,490,000)

<u>- S&A costs      ($199,000)</u>

EBIT                   $801,000

<u>- taxes              ($368,460)</u>

net income       $432,540

total taxes paid = $201,300 + $368,460 = $569,760

if the parent company increases the selling price by 20%

the income statement for the parent company:

total revenue $2,988,000

- COGS          ($1,490,000)

<u>- S&A costs     ($390,000)</u>

EBIT                 $1,108,000

<u>- taxes              ($365,640)</u>

net income       $742,360

the income statement for the subsidiary:

total revenue $3,490,000

- COGS          ($2,988,000)

<u>- S&A costs       ($199,000)</u>

EBIT                   $303,000

<u>- taxes               ($139,380)</u>

net income        $163,620

total taxes paid = $365,640 + $139,380 = $505,020

the parent company's total taxes would decrease by = $569,760 - 505,020 = $64,740

5 0
3 years ago
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