1. Tiger Inc has $11 million of taxable income. What is the tax savings from t

    0

    1. Tiger Inc has $11 million of taxable income. What is the tax savings from tigers Maximum
    DPAD in 2011?

    2. In each of the following independent situations determine the DPAD for 2011 for the
    corporation involved.

    taxpayer

    QPAI

    TI

    W-2 Wages

    a

    green

    $ 800000.00

    $ 600000.00

    $ 120000

    b

    red

    $ 400000

    $ 500000

    $ 20000

    c

    ecru

    $ 900000

    $900000*

    $ 300000

    d

    blue

    $ 700000

    $ 900000

    $ 200000

    e

    orange

    $ 900000

    $ 900000

    $200000**

    *Does not include a $100000 NOL carryover from previous year

    **Only $50000 relates directly to manufacturing activities.

    3. Tern Corp. produces and sells gas in the United States. Of the gas it sells about 4% is
    refined in Louisiana and the remained 96% is purchased from non related source in the Middle East. Suppose that currently the benefits of (SS) 199 to cowbird
    are so minimal that the tax savings are not worth the costs of compliance. Is there anything that Cowbird can do?

    4. Dove Corporation manufactures and sells climate controlled wine cabinets. Its most popular
    model sells for $3000 and comes with a basic 90-day warranty/ For am Extra $150 this warranty is extended to three years and for $300 the warranty is
    extended 10 years

    a. If a customer buys a wine cabinet with the basic warranty how much of the $3000 paid
    represents DPGR to Dove?

    b. Assume a customer pays $3150 to include the extended 3 year warranty. How much of this
    amount is DPGR?

    c. Assume a customer pays $3300 to include the extended 10 year warranty. How much of this
    amount is DPGR?

    d. Could the sales agreement be modified so as to increase the amount qualifying as DPGR?
    Explain.

    5. Finch Corp. Sells portable air filtration system by mean of the internet and direct mail
    orders. Most of the components are purchased from foreign suppliers at a cost of $1600. Finch supplies the remaining components and assemblies the final
    product at a cost of $400. Finch%u2019s marketing packaging and shipping expenses total $40 per unit. Each unit is sold at $2800 each.

    a. What is Finch%u2019s DPGR per unit?

    b. It%u2019s QPAI?

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