ACC-317-Homework-Ch-23

Apr 30th, 2015
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Currently, the earnings of Quail, Inc. are subject to the Federal corporate income tax.Based on your projection of annual earnings of approximately $550,000, Quail’scorporate tax liability would be $187,000. If you liquidated 100% of Quail, Inc. into Roadrunner, Inc.you would bring about the legal dissolution ofQuail which would terminate it being taxed as a separate entity. Unfortunately, Quail, Inc. is considered to be in the sporting goods industry and thus would be classified as an unrelated trade or business and subject to the unrelated business income tax. Even though Roadrunner, Inc. is tax-exempt,the earnings of the sporting goods business conducted by it still would besubject to taxation.

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Leah PasternakFederal Taxation ACC317Chapter 23: Exempt EntitiesHomework Submission32a. Quail is subject to the Federal income tax on corporations. The incometax on corporate taxable income of $550,000 is $187,000.b. Mr. Arthur Morgan, TreasurerRoadrunner, Inc.500 Rouse TowerRochester, NY 14627Dear Mr. Morgan:I am responding to your inquiry regarding the appropriate actions needed to enable the earnings of Quail, Inc. to become a tax-exempt corporation.Currently, the earnings of Quail, Inc. are subject to the Federal corporate income tax. Based on your projection of an

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