Perez Corporation is subject to tax only in State A.Perez generated the following income and deductions. Federal taxable income is the starting point in computing A taxable income.State income taxes are not deductible for A tax purposes.Perez's A taxable income is:

Question

Perez Corporation is subject to tax only in State A.Perez generated the following income and deductions.

Federal taxable income is the starting point in computing A taxable income.State income taxes are not deductible for A tax purposes.Perez's A taxable income is:

Quizplus · Accepted Answer

Since Perez is only subject to tax in State A, we can use federal taxable income as a starting point to determine A taxable income. The federal taxable income is given as $500,000. State income taxes are not deductible for A tax purposes, so we need to add back any state income tax deduction. Since no such deduction is given, we can simply subtract the $50,000 of deductions given to arrive at A taxable income of $450,000. Therefore, the correct answer is option B.

Perez Corporation Is Subject to Tax Only in State A Generated