During the current year, Sparrow Corporation, a calendar year C corporation, had operating income of $425,000, operating expenses of $280,000, a short-term capital loss of $10,000, and a long-term capital gain of $25,000. How much is Sparrow's income tax liability for the year?
A) $32,700
B) $33,600
C) $45,650
D) $62,400
E) None of the above

Question

Quizplus · Accepted Answer

Sparrow's taxable income is $160,000 ($425,000 - $280,000 + $25,000 - $10,000). The corporate tax rate is 21%, so the tax liability is $33,600 (21% of $160,000).

During the Current Year, Sparrow Corporation, a Calendar Year C