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 $50,000. Hoosier's Federal Taxable Income was $150,300. Calculate Hoosier's Illinois state tax base.
\[\begin{array} { | l | c | l | }
\hline \text { Item } & \text { Amoun } & \text { Federal Treatment } \
\hline \text { Illinois Income Taxes } & \$ 33,333 & \begin{array} { l }
\text { Deducted on federal } \
\text { return }
\end{array} \
\hline \text { Indiana Income Taxes } & \$ 18,500 & \begin{array} { l }
\text { Deducted on federal } \
\text { return }
\end{array} \
\hline \begin{array} { l }
\text { Ohio Commercial } \
\text { Activity Tax }
\end{array} & \$ 4,000 & \begin{array} { l }
\text { Deducted on federal } \
\text { return }
\end{array} \
\hline \text { Depreciation } & \$ 40,000 & \begin{array} { l }
\text { Deducted on federal } \
\text { return }
\end{array} \
\hline \text { Illinois Bond Interest } & \$ 10,000 & \begin{array} { l }
\text { Excluded from federal } \
\text { return }
\end{array} \
\hline \text { Indiana Bond Interest } & \$ 15,000 & \begin{array} { l }
\text { Excluded from federal } \
\text { return }
\end{array} \
\hline \text { Federal T-Note Interest } & \$ 2,500 & \begin{array} { l }
\text { Included on federal } \
\text { return }
\end{array} \
\hline
\end{array}\]

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 $50,000. Hoosier's Federal Taxable Income was $150,300. Calculate Hoosier's Illinois state tax base.
\[\begin{array} { | l | c | l | } 
\hline \text { Item } & \text { Amoun } & \text { Federal Treatment } \
\hline \text { Illinois Income Taxes } & \$ 33,333 & \begin{array} { l } 
\text { Deducted on federal } \
\text { return }
\end{array} \
\hline \text { Indiana Income Taxes } & \$ 18,500 & \begin{array} { l } 
\text { Deducted on federal } \
\text { return }
\end{array} \
\hline \begin{array} { l } 
\text { Ohio Commercial } \
\text { Activity Tax }
\end{array} & \$ 4,000 & \begin{array} { l } 
\text { Deducted on federal } \
\text { return }
\end{array} \
\hline \text { Depreciation } & \$ 40,000 & \begin{array} { l } 
\text { Deducted on federal } \
\text { return }
\end{array} \
\hline \text { Illinois Bond Interest } & \$ 10,000 & \begin{array} { l } 
\text { Excluded from federal } \
\text { return }
\end{array} \
\hline \text { Indiana Bond Interest } & \$ 15,000 & \begin{array} { l } 
\text { Excluded from federal } \
\text { return }
\end{array} \
\hline \text { Federal T-Note Interest } & \$ 2,500 & \begin{array} { l } 
\text { Included on federal } \
\text { return }
\end{array} \
\hline
\end{array}\]

Quizplus · Accepted Answer

To calculate Hoosier's Illinois state tax base, we need to start with its federal taxable income and make adjustments for Illinois purposes. One of these adjustments is adding back state depreciation expense.

Hoosier's Illinois tax base would be:

Federal taxable income: $150,300

Add back state depreciation: +$50,000

Illinois tax base: $200,300

Therefore, the correct option is C, $204,633, which is the closest to the calculated Illinois tax base of $200,300.

Hoosier Incorporated Is an Indiana Corporation A) $171,300 B) $173,800 C) $204,633 D)$207,133

Hoosier Incorporated Is an Indiana Corporation A) $171,300
B) $173,800
C) $204,633
D)$207,133