Western Corporation, a calendar year, accrual basis corporation, reported $500,000 of net income after tax on its financial statements prepared in accordance with GAAP. The corporation’s books and records reveal the following information:   Western’s book income included $15,000 of dividends, received from a domestic corporation in which Western owns less than 1 percent of the outstanding stock. Western’s depreciation expense per books was $55,000, and its MACRS depreciation was $70,000. Western earned $5,000 of interest from municipal bonds and $6,000 of interest from corporate bonds. Western’s capital losses exceeded its capital gains by $2,000. Western’s federal income tax expense per books was $103,000. Compute Western’s federal taxable income and regular tax liability.

SWFT Comprehensive Vol 2020
43rd Edition
ISBN:9780357391723
Author:Maloney
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Chapter17: Corporations: Introduction And Operating Rules
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Western Corporation, a calendar year, accrual basis corporation, reported $500,000 of net income after tax on its financial statements prepared in accordance with GAAP. The corporation’s books and records reveal the following information:
 

  • Western’s book income included $15,000 of dividends, received from a domestic corporation in which Western owns less than 1 percent of the outstanding stock.
  • Western’s depreciation expense per books was $55,000, and its MACRS depreciation was $70,000.
  • Western earned $5,000 of interest from municipal bonds and $6,000 of interest from corporate bonds.
  • Western’s capital losses exceeded its capital gains by $2,000.
  • Western’s federal income tax expense per books was $103,000.
  1. Compute Western’s federal taxable income and regular tax liability.

 

My Solutions: federal taxable income = $585,500, regular tax liability = $122,955

(This is a past homework problem that I got wrong. Could you please explain how to do this, I do not understand what I did wrong.)

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