Taxes: Corporate Income

Question 1

Taxes:
Corporate Income
Corporate Tax Formula

Answer 1

Corporate Tax Formula:
Realized Income
- Nonrecognition of Income: 
  Deferrals and Exclusions COGS
= Gross Income
- Deductions
= Taxable Income Before Special Deductions
- Special Deductions
= Taxable Income
X Rate
= Gross Tax
- Credits & Payments
\+ Other Taxes
= Net Tax

Question 2

Taxes:
Corporate Income
General

Answer 2

Special Rules

• No Deduction for Net Capital Loss
• can choose fiscal year unless “S” Corp (calendar)
• Accrual Accounting is Required except Small

Question 3

Taxes:
Corporate Income
Book Income vs Taxable Income (Schedule M-1)

Answer 3

Book Income vs Taxable Income (Schedule M-1)
- taxable income before dividends received and net capital loss deductions
- corps with $10M assets or more
Computation
- nondeductible added back (federal tax exp, net capital loss, expenses in excess of limits)
- income taxable but not included in book income added back (prepaids)
- nontaxable income included in book is subtracted (municipal interest, life insurance proceeds)
- deductions not expenses in book income are subtracted (drd and election to expense)
Schedule M-3

Question 4

Taxes:
Corporate Income
Net Operating Loss

Answer 4

Net Operating Loss

• negative taxable income carried from other years
• back 2 and forward 20
• carryover not included in calculating current NOL
• current year carryover ignores prior year NOL
• charitable contributions not allowed