Corporation P owns 93 percent of the outstanding stock of Corporation T. This year, the corporation’s records provide the following information: Corporation P Corporation T Ordinary operating income (loss) $ 670,000 $ (285,000) Capital gain (loss) (7,000) 7,700 Section 1231 gain (loss) (1,650) 7,200 Required: Compute each corporation’s taxable income if each files a separate tax return.

Corporation P owns 93 percent of the outstanding stock of Corporation T. This year, the corporation’s records provide the following information: Corporation P Corporation T Ordinary operating income (loss) $ 670,000 $ (285,000) Capital gain (loss) (7,000) 7,700 Section 1231 gain (loss) (1,650) 7,200 Required: Compute each corporation’s taxable income if each files a separate tax return.

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter17: Corporations: Introduction And Operating Rules

Section: Chapter Questions

Problem 26CE

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	Corporation P	Corporation T
Ordinary operating income (loss)	$ 670,000	$ (285,000)
Capital gain (loss)	(7,000)	7,700
Section 1231 gain (loss)	(1,650)	7,200

Required:

Compute each corporation’s taxable income if each files a separate tax return.

Definition Definition Increase in the value of a capital asset and the amount that is realized when the asset is sold off. A capital gain may be short-term or long-term depending on the tenure for which the asset is held.

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