Taxable income
Income Taxes
Taxable income
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The taxable income for a business in a year is its gross income less the sum of operating expenses, depreciation, and depletion. Operating expenses may include interest on loans used to operate the business, including the purchase of capital (depreciable) assets.
Income Taxes
Taxable income
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Question 1.
During one year a business had gross income of $3.2 million, operating expenses of $2.7 million, depreciation of $0.2 million, and no natural resource depletion.
What is the company's taxable income for the year?
Choose an answer by clicking on one of the letters below, or click on "Review topic" if needed.
A $3.2 million
B $2.5 million
C $0.5 million
D $0.3 million
Question 2.
During one year a business had gross income of $3.2 million, operating expenses of $2.7 million excluding interest on loans, depreciation of $0.2 million, and no natural resource depletion.
The company had one loan outstanding during the year. Quarterly payments of $55,000 were made on the loan, $15,000 of which was interest.
What is the company's taxable income for the year?
Choose an answer by clicking on one of the letters below, or click on "Review topic" if needed.
A $240,000
B $245,000
C $285,000
D $300,000
