Sailor, Inc., a calendar year corporation, reported $1,003,000 net income before tax on its financial...
70.2K
Verified Solution
Link Copied!
Question
Accounting
Sailor, Inc., a calendar year corporation, reported $1,003,000 net income before tax on its financial statements in accordance with GAAP. The corporate records reveal the following information: Depreciation expense per books was $45,000, and the corporations MACRS depreciation deduction was $74,000. Two years ago, Sailor Inc. realized a $75,000 gain on the sale of investment property and elected to use the installment method to report the gain for tax purposes. Its gross profit percentage is 25% and it received a $50,000 principal payment on its installment note this year. Marketable securities were sold to Sailors only shareholder for $35,000. Sailor purchased the securities two years ago for $45,000. Business equipment was sold for $50,000. The original cost of the equipment was $100,000. Book accumulated depreciation through the date of sale was $42,000, and MACRS accumulated depreciation through the date of sale was $60,000. UNICAP rules require the firm to recognize $90,000 for COGS for tax purposes. GAAP calculation for COGS is $82,000. Compute Sailors taxable income.
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
