During the current year,Sparrow Corporation,a calendar year C corporation,had operating income of $425,000,operating expenses of $280,000,a short-term capital loss of $10,000,and a long-term capital gain of $25,000.How much is Sparrow's income tax liability for the year?
A)$42,650
B)$42,800
C)$45,650
D)$62,400
E)None of the above

Question

Quizplus · Accepted Answer

Sparrow Corporation's taxable income is calculated as follows:
Operating income: $425,000 
Operating expenses: ($280,000) 
Short-term capital loss: ($3,000 limit) ($3,000) 
Long-term capital gain: $25,000 
Taxable income: $167,000 ($425,000 - $280,000 - $3,000 - $25,000) 
Using the 2021 corporate tax rates, Sparrow Corporation's income tax liability is $45,650.

During the Current Year,Sparrow Corporation,a Calendar Year C Corporation,had Operating