Elk,a C corporation,has $500,000 operating income and $350,000 operating expenses during the year.In addition,Elk has a $20,000 long-term capital gain and a $52,000 short-term capital loss.Elk's taxable income is:
A)$98,000.
B)$118,000.
C)$150,000.
D)$170,000.
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 ($500,000) minus operating expenses ($350,000) equals $150,000. The net capital gain/loss is $20,000 (gain) - $52,000 (loss) = -$32,000, but since C corporations can only offset capital losses against capital gains, the taxable income remains $150,000.

Elk,a C Corporation,has $500,000 Operating Income and $350,000 Operating Expenses