LO1 Fairplay Corporation has gross income of $150,000 and taxable income of
$50,000. The company includes no special deductions in the calculation of its taxable income. While reviewing the tax return, Fairplay’s accountant finds $20,000 in chari- table contributions improperly classified as advertising and promotion expense. He sends the return back to the tax department for correction. Write a letter to Fairplay’s accountant explaining why a correction to taxable income must be made.
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