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Shimmer Incorporated is a calendar-year-end, accrual-method corporation. This year, it sells the following long-term assets: Asset Sales Price Cost Accumulated Depreciation Building $ 737,000 $ 718,000 $ 44,000 Sparkle Corporation stock 168,000 231,000 n/a Shimmer does not sell any other assets during the year, and its taxable income before these transactions is $879,000. What are Shimmer's taxable income and tax liability for the year

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anthougo

Shimmer Incorporated's taxable income is $879,000 and the tax liability for the year is $184,590 at a 21% corporate tax rate.

Data and Calculations:

Asset                                    Sales Price    Cost     Accumulated   Capital Gain

                                                                                Depreciation     or (Loss)

Building                                $ 737,000 $ 718,000   $ 44,000      $63,000

Sparkle Corporation stock     168,000    231,000     n/a              ($63,000)

Net Capital Gain or (Loss) = $0

Taxable income before capital gain transactions = $879,000

Add net capital gain or (loss) =                                     $0

Adjusted taxable income                                           $879,000

Tax liability (21%) = $184,590 ($879,000 x 21%)

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