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Yukon Corporation has an operating income of $200,0, pays interest charges of $50,0, and pays dividends of $40,0. The company’s taxable income is?
Net Income i.e. $150
income from counting operations before tax 150,0,
200000 -50000 =150000 = Taxable income
40000 is a distribution for net profit
The answer is150,000, as income only after interest obligation, if any is considered for taxation.
in this case,
the answer will be
operating income less intrest charges = taxable income
Operating Profit 200K
less: Interest -50K
Net Income 150K (Taxable income)
200 -50 comes out to150 which will be the taxable income.
Taxable income is150.00 (arrive at operating income - interest charges)
If it pays dividend and pay tax is double taxed.
The taxable income is $150, while dividend if paid during the year will be shown in SOCIE if not paid during the year will only be mentioned in Director report only and not mentioned elsewhere in the financial statement.
$150 (operating income less intrest charges = taxable income)
