B of all intercompany dividends paid by the

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Unformatted text preview: 0% DRD. CPA-02204 Type1 M/C 101. CPA-02204 A-D Nov 89 II #44 Corr Ans: C PM#7 R 3-99 Page 16 Kell Corp. Income statement for the year ended December 31, 1988: Sales Cost of sales Gross margin Operating expenses Operating income Other income: Gain on sale of investments Life insurance policy proceeds Dividends Total Other expense: Contributions Income before income tax $900,000 600,000 300,000 250,000 50,000 $15,000 10,000 3,000 78,000 28,000 8,000 $70,000 All of the contributions were to qualified charitable organizations. When Kell computes the maximum allowable deduction for contributions, what percentage of contribution base income should Kell use? a. b. c. d. 50% 30% 10% 5% CPA-02204 Explanation Choice "c" is correct. 10%. Rule: The charitable deduction of a corporation is limited to 10% of its taxable income computed without regard to: 1. 2. 3. 4. The contribution deduction The dividends received deduction Net operating loss carryback Capital loss carryback Choices "a" and "b" are incor...
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This note was uploaded on 06/14/2013 for the course ACCOUNTING Regulation taught by Professor Becker during the Fall '10 term at Keller Graduate School of Management.

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