Hallick, a Michigan corporation, operates two facilities for the manufacture of tangible goods; one facility is located in Michigan and the other is located in Canada. In the current year, Hallick earned the following net income from these facilities:

Hallick€™s total compensation paid to its U.S. workforce was $635,000, and total compensation paid to its Canadian workforce was $409,000. In addition to its manufacturing income, Hallick earned $39,400 taxable investment income in the current year.
a. Compute Hallick€™s current year taxable income.
b. How would your computation change if Hallick€™s Canadian facility generated a $112,700 loss instead of $343,000 net income?

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Michigan Canada Gross receipts from sales Cost of goods sold Gross manufacturing profit Other deductible expenses Net income $1,978,000 S1,642,000 1,001,000) $ 641,000 (298,000) 745,000 (316,000) 429,000 $