Exam II-Spring2007

Exam II-Spring2007 - ACCOUNTANCY 321 Spring 2007 EXAM II I Howard Corporation is a calendar year"C corporation The corporation's records revealed

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ACCOUNTANCY 321 Spring, 2007 EXAM II I. Howard Corporation is a calendar year “C” corporation. The corporation’s records revealed the following for its calendar year 2006: Gross profit from sales $900,000 Cash operating expenses 350,000 Depreciation expense 110,000 Dividend income received from taxable publicly traded domestic corporations (Howard owns 40% of each of these companies) 200,000 Dividends paid to shareholders 125,000 Long-term capital losses ( 85,000) Short-term capital gains 60,000 Charitable contributions 100,000 Capital loss carryforward (from 1995) (25,000) A. Please list and explain three special tax limitations on deductions which must be taken into consideration in the determination of Howard, Inc.’s taxable income. Do not compute Howard’s taxable income, instead discuss the critical tax issues involved in the computational process. Please list only three special tax limitations on deductions. ( 3 pts. each ) B. Compute Howard’s taxable income before any special deductions. You must show details of your work to receive partial credit. (5 pts.) C. Based upon the information computed in part B, what is the maximum possible charitable contribution deduction (without regard to actual) for the company this year? Please explain. (3 pts.) D. Based upon the information computed in part B, what is Howard’s deductible charitable contribution? (2 pts.) E. Determine Howard’s dividends-received deduction for 2006. (3 pts.) F. Based upon the facts as presented, what is Howard, Inc.’s taxable income? (Hint: you will need to use the results of your computations from many of the preceding parts of this question). You must show details of your work to receive partial credit. (8 pts.) 1
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II. Retailers traditionally have been tight-lipped about their profits on warranty sales.
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This note was uploaded on 09/09/2009 for the course ACCTG 321 taught by Professor Will during the Spring '08 term at San Diego State.

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Exam II-Spring2007 - ACCOUNTANCY 321 Spring 2007 EXAM II I Howard Corporation is a calendar year"C corporation The corporation's records revealed

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