R, a C corporation, has the following information: $\begin{array}{lrr}&2012&2013\
\text { Taxable income before charitable deductions } & \$ 30,000 & \$ 10,000 \
\text { Charitable contributions } & 0 & 3,000
\end{array}$ Assume R did not have dividend income, NOL, or capital loss carrybacks in either year.R's taxable incomes for 2012 and for 2013, respectively, are
A)$30,000; $9,000
B)$29,000; $8,000
C)$28,000; $7,000
D)$27,000; $7,000

Question

Quizplus · Accepted Answer

For 2012, R's taxable income is $30,000 because there were no charitable contributions made that year. For 2013, R made $3,000 in charitable contributions. However, corporations can only deduct charitable contributions up to 10% of their taxable income before the deduction. In 2013, 10% of $10,000 is $1,000, which is less than the $3,000 contributed, so only $1,000 can be deducted. Therefore, R's taxable income for 2013 is $10,000 - $1,000 = $9,000.

R, a C Corporation, Has the Following Information Assume R Did Not Have Dividend Income, NOL, or Capital