Elk,a C corporation,has $400,000 operating income and $350,000 operating expenses during the year.In addition,Elk has a $30,000 long-term capital gain and a $52,000 short-term capital loss.Elk's taxable income is:
A)($2,000).
B)$28,000.
C)$50,000.
D)$80,000.
E)None of the above.

Question

Quizplus · Accepted Answer

$400,000 (operating income)- $350,000 (operating expenses)+ $30,000 (LTCG)- $30,000 (STCL)= $50,000 taxable income.A corporation cannot deduct a net capital loss in the year incurred.The net loss ($22,000)can be carried back three years and offset against capital gain in the carryback years.If the capital loss is not used in the carryback,it can be carried forward five years.Capital gains of corporations are included in taxable income and are not subject to the favorable rates applicable to individuals.

Elk,a C Corporation,has $400,000 Operating Income and $350,000 Operating Expenses