Ask Question
9 June, 17:49

During the current year, Sparrow Corporation, a calendar year C corporation, had operating income of $425,000, operating expenses of $280,000, a short-term capital loss of $10,000, and a long-term capital gain of $25,000. How much is Sparrow's income tax liability for the year?

+2
Answers (1)
  1. 9 June, 19:51
    0
    Answer: $ 45,650

    Explanation:

    Net Operating Income = Operating income - Operating Expenses

    = $425,000 - $280,000

    = $145,000

    Net capital gain = Long-term capital gain - short-term capital loss

    = $25,000 - $10,000

    = $15,000

    Taxable Income = Net Operating Income + Net capital gain

    = $145,000 + $15,000

    = $160,000

    Total Tax Liability = Tax on $100,000 - Tax on ($16,000-$100,000) @ 39%

    = $ 22,250 + $23,400

    = $ 45,650
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “During the current year, Sparrow Corporation, a calendar year C corporation, had operating income of $425,000, operating expenses of ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers