Question
M corporation is subject to tax only in state b state b law provides for the use of federal taxable income before net operating loss
M corporation is subject to tax only in state b state b law provides for the use of federal taxable income before net operating loss and special deductions as the starting point for computing state income . State b allows a deduction for interest received on federal obligations and disallows any deduction for state income tax in addition it taxes income on municipal bonds. federal depreciation differs from state depreciation due to the fact that there was a lag in state b adopting federal depreciation methods.
federal taxable income 750,000
interest on US treasury bill 10,000
state income tax 50,000
interest on state a bond 15,000
interest on state b bond 5,000
depreciation for federal tax purposes 50,000
depreciation for state tax purposes 60,000
determine the amount of M's taxable income that is subject to tax in state b
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South Western Federal Taxation 2016 Corporations Partnerships Estates And Trusts
Authors: James Boyd, William Hoffman, Raabe, David Maloney, Young
39th Edition
978-1305399884
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