Question

Black Acres Apartment, Inc needs to compute taxable income (TI) for the preceding year and wants your assistance. The effective gross income (EGI) was $52,000; operating expenses were $19,000; $2,000 was put into a fund for future replacement of stoves and refrigerators; debt service was $26,662, of which $25,126 was interest; and the deprecation deduction was $17,000. Compute the taxable income from operations:

Answer 1

Answer:

($9,126)

Explanation:

Computation for the taxable income from operations:

Effective Gross Income $52,000

Less: Operating Expenses($19,000)

Less: Capital Expenditures($2,000)

Net Operating Income $31,000

($52,000-$19,000-$2,000)

Add: CAPX $2,000

Less: Interest on Debt Service($25,126)

Less: Tax Deprecation($17,000)

Taxable Income (Loss)$(9,126)

($31,000+$2,000-$25,126-$17,000)

Therefore the taxable income from operations: is $(9,126)