Let's break down the calculation for **Bledsoe Corporation's 2024 tax liability** step by step. ### Step 1: Calculate Taxable Income #### **A. Start with Revenues** - Revenues: **$405,600** #### **B. Subtract Regular Deductions** - Regular deductions: **$293,500** #### **C. Charitable Contributions Deduction** - Charitable contributions: **$32,500** **However, the corporate deduction for charitable contributions is limited to 10% of Taxable Income before charitable contributions, DRD (Dividends Received Deduction), and NOL carryforward/back.** Let's call taxable income before these deductions **X**. **Step 1: Calculate DRD (Dividends Received Deduction)** ##### Dividends Received: $7,900 - Ownership: 75% - **Dividends Received Deduction (DRD) rate:** 65% (since the corporation owns >20% but <80%) **DRD = $7,900 × 65% = $5,135** --- ### Step 2: Calculate Tentative Taxable Income Before Charitable Contribution and DRD **Tentative Taxable Income (before DRD and Charitable Contributions):** \[ \text{Revenues} + \text{Dividends} - \text{Regular Deductions} = \$405,600 + \$7,900 - \$293,500 = \$120,000 \] --- ### Step 3: Charitable Contribution Limit - 10% of $120,000 = $12,000 - Actual contribution: $32,500 - **Deduction allowed: $12,000** - Excess ($32,500 - $12,000 = $20,500) can be carried forward. --- ### Step 4: Calculate Taxable Income \[ \text{Taxable Income} = \text{Tentative Taxable Income} - \text{Charitable Deduction} - \text{DRD} \] \[ = \$120,000 - \$12,000 - \$5,135 = \$102,865 \] --- ### Step 5: Calculate Tax Liability - **Corporate tax rate for 2024:** 21% \[ \text{Tax Liability} = \$102,865 \times 21\% = \$21,601.65 \] --- ## **Final Summary** **Bledsoe Corporation’s 2024 federal income tax liability is:** \[ \boxed{\$21,602} \] (Rounded to the nearest dollar.) **Explanation:** - Start with total income, add dividends. - Subtract regular deductions. - Charitable contributions deduction is limited to 10% of tentative income before DRD and charitable deduction. - DRD is 65% of dividends received (because Bledsoe owns 75% of the other corporation). - Taxable income is reduced by both the DRD and the charitable deduction. - Multiply the final taxable income by the 21% corporate tax rate to get the tax liability.

Let's carefully analyze Bledsoe Corporation's 2024 tax liability step by step: ### Step 1: Gather all relevant data - **Revenues:** $405,600 - **Regular deductions:** $293,500 - **Charitable contributions:** $32,500 - **Dividends received:** $7,900 - **Ownership in another corporation:** 75% ### Step 2: Calculate Dividends Received Deduction (DRD) - Since Bledsoe owns 75% of the other corporation, the DRD rate is **65%**. - **DRD = 75% ownership × $7,900 × 65% = $5,135** ### Step 3: Determine tentative taxable income before charitable deductions - **Gross income:** $405,600 (revenues) + $7,900 (dividends) - **Less regular deductions:** $293,500 \[ \text{Tentative income} = (405,600 + 7,900) - 293,500 = 413,500 - 293,500 = \mathbf{\$120,000} \] ### Step 4: Calculate charitable contribution deduction limit - The limit is **10% of tentative taxable income** before charitable deductions. - **Limit = 10% of $120,000 = $12,000** - Actual contributions are $32,500, but only $12,000 is deductible this year. The excess ($20,500) can be carried forward. ### Step 5: Calculate taxable income - Starting from the tentative income: \[ \text{Taxable income} = 120,000 - 12,000 (\text{charity}) - 5,135 (\text{DRD}) = \mathbf{\$102,865} \] ### Step 6: Calculate tax liability - The corporate tax rate for 2024 is **21%**. \[ \text{Tax liability} = 102,865 \times 21\% = \$21,601.65 \] ### **Final answer:** **Bledsoe Corporation's 2024 tax liability is approximately \(\boxed{\$21,602}\).** ### **Summary:** - Total income combines revenues and dividends. - Deduct regular expenses. - Deduct the allowable charitable contribution (limited to 10% of tentative income). - Deduct the DRD (65% of dividends received). - Apply the 21% corporate tax rate to the taxable income to find the tax liability. If you have further questions or need clarification, feel free to ask!