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SEP, a calendar year corporation, reported $918,000 net income before tax on its financial statements prepared in

accordance with GAAP. The corporation's records reveal the following information:

. SEP incurred $75,000 of research costs that resulted in a new l7-yeat patent for the corporation. SEP expensed these costs for book purposes.

.SEP's depreciation expense per books was $98,222, and its MACRS depreciation deduction was

$ 120,000.

SEP was organized two years ago. For its first taxable year, it capitallzed $27,480 start-up costs and elected to amortize them over 180 months. For book purposes, it expensed the costs in the year incurred.

Compute SEP's taxable income.

Top Answer

SEP's taxable income is $894390 SEP deduct 75000... View the full answer

SEP'S cxalci.PNG

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