Question

LNS corporation reports book revenue of $2,940,000. Included in the $2,940,000 is $17,500 of tax-exempt interest income. LNS reports $2,560,000 in ordinary and necessary business expenses. What is LNS Corporation’s taxable income for the year?

Answer 1

Answer:

$362,500

Explanation:

The computation of the LNS corporation taxable income is shown below:

Book revenue reported amount       $2,940,000

Less: Tax-exempt interest income     -$17,500

Less: Ordinary and necessary business expenses -$2,560,000

Taxable income                                   $362,500

The taxable income is computed after deducting the tax exempt interest income and the deductions from the book revenue reported amount