Delta Inc. generated $668,200 ordinary income from operations this year. It also recognized $3,910 recaptured ordinary income, $5,000 net Section 1231 gain, and $14,600 net capital loss on the sale of assets. Compute Delta's taxable income.
A) $672,110
B) $677,100
C) $668,200
D) $697,700

Question

Quizplus · Accepted Answer

Delta's taxable income is calculated by adding its ordinary income ($668,200) to its recaptured ordinary income ($3,910), resulting in $672,110. Section 1231 gains and capital losses affect the composition of income but do not change the total taxable income calculated from ordinary income and recaptured income in this context.

Delta Inc Generated $668,200 Ordinary Income from Operations This Year