Elk, a C corporation, has $370,000 operating income and $290,000 operating expenses during the year. In addition, Elk has a $10,000 long-term capital gain and a $17,000 short-term capital loss. Elk's taxable income is:
A) $90,000.
B) $80,000.
C) $73,000.
D) $63,000.
E) None of the above.

Question

Quizplus · Accepted Answer

Elk's taxable income is calculated by subtracting operating expenses from operating income and then adjusting for capital gains and losses. Operating income ($370,000) minus operating expenses ($290,000) equals $80,000. The net capital gain/loss is a $7,000 loss ($10,000 gain - $17,000 loss), which cannot offset ordinary income for a C corporation, so taxable income remains $80,000.

Elk, a C Corporation, Has $370,000 Operating Income and $290,000