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(Solved) TSK Corp. operates a document storage company. Scott, the president owns 60% of the stock. In 2014, TSK Corp. had Book Net Income of $800,000.The...


1. TSK Corp. operates a document storage company. Scott, the president owns 60% of the stock. In 2014, TSK Corp. had Book Net Income of $800,000.The following items were included in Book Net Income:

Dividend   income                                                                     20,000

Interest income                                                                         10,000

Long term capital gain                                                                 8,000

Federal tax expense                                                                   260,000

Other operating expenses                                                          300,000

Further discussion with Scott revealed the following additional information:

  1. The corporation is a calendar year end and uses the accrual method of accounting.
  2. The dividends were from Exxon stock and TSK owns less than 5% of this stock.
  3. Interest income is from the State of New Jersey.
  4. Operating expenses included a $5000 penalty for late payment of Federal taxes, and $12,000 premiums on officer life insurance
  5. Operating expenses included an estimated bad debt expense of $30,000. Actual bad debt write offs during the year were $9000.
  6. Tax depreciation exceeds book depreciation by $14,000.
  7. The corporation has a long term capital loss carryover of $2000 from 2011,
  8. On July 1, 2014 TSK Corporation paid a distribution of $100,000 to its shareholders. At December 31, 2013, the corporation had a deficit of $140,000.
  9. Assume a 35% tax rate.

Based on the above information compute TSK’s earnings and profits as of December 31, 2014.

 


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