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leva [86]
3 years ago
12

Jonathan (an individual) owns 100% of the stock of Husky, Inc. (a C corporation) and 100% of the stock of Calhoun, Inc. (another

C Corporation). Calhoun, Inc. is very successful and has millions in earnings and profits. Husky has not fared so well and has no earnings and profits. In the current year, Husky ran out of cash and could not make its payroll. Because of this situation, Jonathan directed Calhoun, Inc. to pay $100,000 in wages to employees of Husky. The $100,000 payment was not structured as a loan.
A. How should Calhoun, Inc. treat the $100,000 payment for tax purposes?
B. How should Jonathan treat the $100,000 payment for tax purposes?
Business
1 answer:
BaLLatris [955]3 years ago
8 0

Answer: A. As Expenses

B. No treatment.

Explanation:

A. The $100,000 was not structured and a loan so it will be accounted for as EXPENSES. This means that it will be deducted from the Income for the year from Calhoun's books.

B. A C Corporation is by definition taxed SEPARATELY from it's owners in the United States of America. Seeing as both Corporations were C Corporations, Jonathan as the owner of both companies need not worry about how he should treat the $100,000 payment as he will not ne taxed on it.

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Answer:

A. Institutional Capitalism

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3 years ago
Aubey Aircraft recently announced that its net income increased sharply from the previous year, yet its net cash flow from opera
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Answer:

Option D) The company's depreciation and amortization expenses declined

Explanation:

When Aubey Aircraft´s depreciation and amortization decrease, it has less cost of sales and an improvement in the Gross Margin, hence,  in the Net Income, but this enhancement in the Net Income has an opposite effect on Net Cash Flow because less depreciation and amortization means less Net Cash Flow,  

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3 years ago
Which of the following accounts are normally reported as current liabilities on a classified balance sheet?
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Answer:

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From the options given d. Income Taxes Payable and Salaries Payable both presents current liabilities.

7 0
3 years ago
In response to an upturn in the economy, entrepreneurs seek to expand their businesses. a. What will happen to nominal interest
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Explanation:

When contemplating unemployment, the nominal interest rate applies to the rate of interest. Net may, without taking into consideration any commissions or compounded interest, be related to the advertised or reported interest rate of a loan.

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