Brisbane Publishing Company had accounting net income of $565,000 for the December 31, 2020 year-end. The following
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Question:
Brisbane Publishing Company had accounting net income of $565,000 for the December 31, 2020 year-end. The following information pertains to the company for 2020:
- The owner’s spouse was paid $100,000 to act as a receptionist to the owner/president of the company but did not do anything. Wages expense also includes wages paid to two other receptionist who earned $42,500 each during 2020.
- Meals and entertainment for the year amounted to $6,800. Included in this amount was $1,000 paid for the company Christmas party.
- Amortization expense for the year was $17,600.
- CCA was correctly calculated as $22,000 for 2020.
- The owner paid $8,000 to take some clients to Fort Lauderdale at a golf club for a week. This amount was deducted as an advertising and promotional expense in 2020.
- The company sold a piece of land next to the company building for $50,000. The cost of the land was $40,000 and the accounting gain was added to the net income for accounting purposes.
- Included in the calculation of accounting net income was a deduction for three conventions at a cost of $1,500 each.
- The company paid $22,000 in landscaping fees during 2020 and the full amount was deducted when coming up with accounting net income.
- Brisbane Publishing supports the local college writing competition with an annual sponsorship of $1,500 every year. This amount was deducted when coming up with the net income above.
- The company also donated $5,000 to a local charity and deducted it in the accounting net income.
Required: For Brisbane Publishing Company’s 2020 taxation year, determine net income for tax purposes.
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