During the current year, Jay Corporation, a calendar year personal service C corporation, had operating income of income of $300,000, operating expenses of $200,000, a short-term capital gain of $5,000, and a long-term capital loss of $35,000. How much is Jay's income tax liability for the year?
A) $14,700.
B) $21,000.
C) $22,250.
D) $35,000.
E) None of the above.

Question

Quizplus · Accepted Answer

Jay Corporation's taxable income is $100,000 ($300,000 operating income - $200,000 operating expenses + $5,000 short-term capital gain - $35,000 long-term capital loss, which is not deductible against ordinary income). The corporate tax rate is 21%, so the tax liability is $21,000 ($100,000 * 21%).

During the Current Year, Jay Corporation, a Calendar Year Personal