Question 61. (LO 2) Coattail Corporation (CC) manufactures and sells wom

61. (LO 2) Coattail Corporation (CC) manufactures and sells women and children’s coats. This year CC donated 1,000 coats to a qualified public charity. The charity distributed the coats to needy women and children throughout the region. At the time of the contribution, the fair market value of each coat was $80. Determine the amount of CC’s charitable contribution (the taxable income limitation does not apply) for the coats assuming the following:

CC’s adjusted basis in each coat was $30.

CC’s adjusted basis in each coat was $10.

62. (LO 2) Maple Corp. owns several pieces of highly valued paintings that are on display in the corporation’s headquarters. This year, it donated one of the paintings valued at $100,000 (adjusted basis of $25,000) to a local museum for the museum to display. What is the amount of Maple Corp.’s charitable contribution deduction for the painting (assuming income limitations do not apply)? What would be Maple’s deduction if the museum sold the painting one month after it received it from Maple (Assume Maple corporation had prior knowledge of the museum’s intention to sell the painting after it received it)?

63. (LO 2) Riverbend Inc. received a $200,000 dividend from stock it held in Hobble Corporation. Riverbend’s taxable income is $2,100,000 before deducting the dividends received deduction (DRD), a $40,000 NOL carryover, a $10,000 domestic production activities deduction, and a $100,000 charitable contribution.

a. What is Riverbend’s deductible DRD assuming it owns 10 percent of Hobble Corporation?

b. Assuming the facts in part a, what is Riverbend’s marginal tax rate on the dividend?

%

c. What is Riverbend’s DRD assuming it owns 60 percent of Hobble Corporation?

d. Assuming the facts in part c, what is Riverbend’s marginal tax rate on the dividend?

e. What is Riverbend’s DRD assuming it owns 85% of Hobble Corporation (and is part of the same affiliated group)?

f. Assuming the facts in part e, what is Riverbend’s marginal tax rate on the dividend?

64. (LO 2) Wasatch Corp. (WC) received a $200,000 dividend from Tager Corporation (TC). WC owns 15 percent of the TC stock. Compute WC’s deductible DRD in each of the following situations:

a. WC’s taxable income (loss) without the dividend income or the DRD is $10,000.

b. WC’s taxable income (loss) without the dividend income or the DRD is ($10,000).

c. WC’s taxable income (loss) without the dividend income or the DRD is ($59,000).

d. WC’s taxable income (loss) without the dividend income or the DRD is ($61,000).

e. WC’s taxable income (loss) without the dividend income or the DRD is ($500,000).

f. What is WC’s book-tax difference associated with its DRD in part a? Is the difference favorable or unfavorable? Is it permanent or temporary?

65. (LO 2) Compute SWK Inc.’s tax liability for each of the following scenarios:

a. SWK’s taxable income is $60,000.

b. SWK’s taxable income is $275,000.

c. SWK’s taxable income is $15,500,000.

d. SWK’s taxable income for the year is $50,000,000.