Question

Sunset Corporation (a C corporation) had operating income of $200,000 and operating expenses of $175,000. In addition, Sunset had a $30,000 long-term capital gain, a $52,000 short-term capital loss, and $5,000 tax-exempt interest income. What is Sunset Corporation's taxable income for the year

Answer 1

Answer:

Sunset Corporation's taxable income is $3,000

Explanation:

Calculation of Sunset Corporation's taxable income is as worked below

Taxable Income = Operating Income - Operating Expenses + Capital Gains - Capital Losses  

Taxable Income = $200,000 - $175,000 + $30,000 - $52,000

Taxable Income = $3,000.  Hence, Sunset Corporation's taxable income is $3,000

 

Note that taxable income is the amount of income used to calculate how much tax an individual or a company owes or is going to pay the government in a particular tax year.