LO1 Elvira owns 100% of the stock of Midnite Corporation, a manufacturer of galobno- tites. During the current year, Midnite has operating income of $50,000, dividend income of $16,000 from investments in other corporations, and losses from investments in limited partnerships of $46,000. It pays $20,000 in dividends.
a. What are the amounts of taxable income and tax liability reported by Midnite for the current year?
b. Assume that Midnite Corporation is operated as an S corporation. Explain why the amount of taxable income resulting from the items reported by both Midnite Corporation and Elvira are different from your answers in part a.
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