Ramirez Corporation, which is subject to income tax only in State A, generated the following income and deductions:
Federal taxable income$500,000
State A income tax expense45,000
Depreciation allowed for Federal tax purposes300,000
Depreciation allowed for state tax purposes250,000
?
Federal taxable income is the starting point in computing A taxable income. State income taxes are not deductible for A tax purposes. Ramirez’s A taxable income is:
A. $495,000
B. $500,000
C. $545,000
D. $595,000
Answer: D
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