Application Problems
- This year, GHJ Inc. received the following dividends:
| BP Inc. (a taxable California corporation in which GHJ holds a 2% stock interest) |
$17,300 |
| MN Inc. (a taxable Florida corporation in which GHJ holds a 52% stock interest |
80,800 |
| AB Inc. (a taxable Canadian corporation in which GHJ holds a 21% stock interest) | 17,300 |
Compute GHJ Inc.’s dividend received deduction.
- Corporation AB’s marginal tax rate is 15 percent and Corporation YZ’s marginal tax rate is 35 percent.
a) If both corporations are entitled to an additional $5,000 deduction, how much tax savings will the deduction generate for each corporation?
b) If both corporations are entitled to a $5,000 tax credit, how much tax savings will the credit generate for each corporation? (Assume that each corporation’s pre credit tax exceeds $5,000.)
- In each of the following cases, compute the corporation’s regular tax.
a) Corporation A, which distributes frozen food products, has $160,000 taxable income.
b) Corporation B, a personal service corporation providing medical care, has $160,000 taxable income.
c) Corporation C, which develops and operates golf resorts, has $3.91 million taxable income.
d) Corporation D, which drills oil wells, has $16.8 million taxable income.
e) Corporation E, which distributes farm equipment, has $57 million taxable income.