On December 28, 2012, the Board of Directors of Taupe

question 73

Essay

On December 28, 2012, the board of directors of Taupe Corporation, a calendar year, accrual method C corporation, authorized a contribution of land to a qualified charitable organization. The land (basis of $75,000, fair market value of $125,000) was acquired five years ago and held as an investment. For purposes of the taxable income limitation applicable to charitable deductions, Taupe has taxable income of $800,000 and $950,000 for 2012 and 2013, respectively. Describe the tax consequences to Taupe Corporation under the following independent situations.

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Definitions:

High Wages

A level of income that is significantly above the average or minimum wage.

Protectionism

Economic policy of restricting imports from other countries through methods such as tariffs and quotas, intended to protect domestic industries from foreign competition.

Infant Industries

New or emerging industries in a country that are protected by the government through subsidies or tariffs to promote growth.

Foreign Suppliers' Dumping

The practice where a company exports a product at a price lower than the price it normally charges in its own home market, often with the intention to undercut local markets or gain market share.