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Cpa 02147 pii may 93 42 page 6 ace rentals inc an

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Unformatted text preview: penditures are deductible by the liquidating corporation, on its final tax return. CPA-02145 Type1 M/C A-D Corr Ans: C PM#70 R 3-01 52. CPA-02145 PII May 93 #41 Page 22 In 19X2, Acorn Inc. had the following items of income and expense: Sales Cost of sales Dividends received $500,000 250,000 25,000 The dividends were received from a corporation of which Acorn owns 30%. In Acorn's 19X2 corporate income tax return, what amount should be reported as income before special deductions? a. b. c. d. $525,000 $505,000 $275,000 $250,000 CPA-02145 Explanation 23 © 2009 DeVry/Becker Educational Development Corp. All rights reserved. Maxixishere Pdf Collection Becker CPA Review, PassMaster Questions Lecture: Regulation 3 Choice "c" is correct. Income before special deductions includes sales, dividends received and cost of sales. It excludes the dividends received deduction, which is a "special" deduction. Sales Cost of sales Gross profit Dividends received Income before special deductions $ 500,000 (250,000) 250,000 2...
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