Answer :
Final answer:
The taxable income for the cash method taxpayer is $6,076,000.
Explanation:
To calculate the taxable income for a cash method taxpayer, we need to consider the various sources of income and deductions provided:
- Business Income: $1,200,000
- Business Expenses: $160,000
- NYS Bond Interest: $2,000
- Dividend received from 75% owned Corporation: $8,000
- Reasonable Compensation: $5,500,000
- Compensation of Family Members Not Active in the Company: $150,000
- Capital Loss: ($5,000)
- Interest Expense paid to Bank: $250,000
- §179 Depreciation Tractor: $25,000
- Bonus Depreciation Heavy Truck: $50,000
To calculate the taxable income, we need to subtract the total deductions from the total income:
- Total Income: $1,200,000 + $8,000 + $5,500,000 = $6,708,000
- Total Deductions: $160,000 + $2,000 + $150,000 + ($5,000) + $250,000 + $25,000 + $50,000 = $632,000
Therefore, the taxable income for the cash method taxpayer is:
$6,708,000 - $632,000 = $6,076,000
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