Question

LNS Corporation reports revenues of $2,100,000. Included in the $2,100,000 is $27,250 of tax-exempt interest income. LNS reports $1,507,500 in ordinary and necessary business expenses. What is LNS corporation’s taxable income for the year?

Answer 1

Answer:

Net taxable income = $565,250

Explanation:

Given:

Revenue during the year = $2,100,000

Tax-exempt income = $27,250

Expenses during the year = $1,507,500

Computation of Gross taxable income:

It is given that revenue of $2,100,000 include tax exempt income of $27,250.

So,

Gross taxable income = Revenue during the year - Tax-exempt income

Gross taxable income = $2,100,000 - $27,250

Gross taxable income = $2,072,750

Computation of Net taxable income:

Net taxable income = Gross taxable income - Expenses during the year

Net taxable income = $2,072,750 - $1,507,500

Net taxable income = $565,250