Hoosier Incorporated is an Indiana corporation. It properly included, deducted, or excluded the following items on its federal tax return in the current year: State depreciation expense was $51,300. Hoosier's federal taxable income was $151,600. Calculate Hoosier's Indiana state tax base.

Question

Hoosier Incorporated is an Indiana corporation. It properly included, deducted, or excluded the following items on its federal tax return in the current year:  State depreciation expense was $51,300. Hoosier's federal taxable income was $151,600. Calculate Hoosier's Indiana state tax base.

Quizplus · Accepted Answer

To calculate Indiana state tax base, we start with federal taxable income and make adjustments for certain items that are included or excluded under Indiana tax law. One such adjustment is adding back state depreciation expense, which was $51,300. Therefore, Hoosier's Indiana state tax base is $151,600 + $51,300 = $202,900. However, Indiana also allows a deduction for a portion of federal income tax paid, which in this case is $2,967 ($151,600 ÷ $17,707,500 federal taxable income x $350,000 Indiana tax liability limit). Thus, Hoosier's final Indiana state tax base is $202,900 - $2,967 = $199,933. However, none of the answer choices match this amount exactly. The closest choice is C, $200,933, which is only $1,000 off.

Hoosier Incorporated Is an Indiana Corporation