Earwood Corporation, a calendar year taxpayer, receives dividend income of $140,000 from a corporation in...
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Earwood Corporation, a calendar year taxpayer, receives dividend income of $140,000 from a corporation in which it holds a 35% interest. Earwood also receives interest income of $15,000 from municipal bonds. (The municipality used the proceeds from the bond issue to construct a park.) Earwood borrowed funds to purchase the municipal bonds and pays $12,000 of interest on the loan. Excluding these items, Earwood's taxable income is $320,000.
a. After these items are taken into account, Earwood Corporation's taxable income is
**The answer is not $362,000
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