Hoosier Incorporated is an Indiana corporation. It properly included, deducted, or excluded the following items on its federal tax return in the current year: $\begin{array}{lrll}
\text { Item } & \text { Amount } & \text { Federal Treatment } \
\hline
\text { Illinois Income Taxes } & \$ 33,333 & \text { Deducted on federal return } \
\text { Indiana Income Taxes } & \$ 18,500 & \text { Deducted on federal return } \
\text { Ohio Commercial Activity Tax } & \$ 4,000 & \text { Deducted on federal return } \
\text { Depreciation } & \$ 40,000 & \text { Deducted on federal return } \
\text { Illinois Bond Interest } & \$ 10,000 & \text { Excluded from federal return } \
\text { Indiana Bond Interest } & \$ 15,000 & \text { Excluded from federal return } \
\text { Federal T-Note Interest } & \$ 2,500 & \text { Included on federal return }
\end{array}$ State depreciation expense was $50,000. Hoosier's Federal Taxable Income was $150,300. Calculate Hoosier's Illinois state tax base.

Question

Quizplus · Accepted Answer

To calculate the Illinois state tax base, we will start with the Federal Taxable Income of $150,300, and make adjustments for state-specific items.

1. Add back Illinois Income Taxes: +$33,333
2. Add back Indiana Income Taxes: +$18,500
3. Add back Ohio Commercial Activity Tax: +$4,000
4. Add back State Depreciation: +$50,000
5. Add back Illinois Bond Interest: +$10,000
6. Add back Indiana Bond Interest: +$15,000
7. Subtract Federal T-Note Interest: -$2,500

So the Illinois state tax base is:

$150,300 + $33,333 + $18,500 + $4,000 + $50,000 + $10,000 + $15,000 - $2,500 = $279,633

Therefore, the best choice is C, which corresponds to the calculated Illinois state tax base.

Hoosier Incorporated Is an Indiana Corporation State Depreciation Expense Was $50,000