How is net income calculated?

How is income tax for a corporation calculated?

  • is it: beginning retained earnings + net income - dividends - requisition of shares = ending retained earnings ending retained earnings x percentage of income tax = Income Tax Is this right? thanks

  • Answer:

    The beginning retained earnings would already have been subject to tax in the prior reporting period. The net income is taxed, and then becomes part of the retained earnings.

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Not even close. Go back to class and start studying. Income tax for a corporation is based upon taxable income, which is net income + disallowed expenses (bribes, fines, etc.) - any tax favorable extraordinary items.

Bostonian In MO

No even close. Some things really are simple. It's Taxable Income x Tax Rate.

Fred S

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