9 In September 2008, the IRS changed tax laws to allow banks to utilize the tax loss carryforwards of banks they acquire to shield up to 100% of their future income from taxes (prior law restricted theKability of acquirers to use these credits). Suppose Fargo Bank acquired Covia Bank and with it acquired $74 billion in tax loss carryforwards. If Fargo Bank was expected to generate taxable incomeof $10 billion per year in the future, and its tax rate was 30%, what was the present value of these acquired tax loss carryforwards given a cost of capital of 8%7 How would the present value changeunder current law which restricts the amount of the deduction to 80% of pre-tax income?if Fargo Bank was expected to generate taxable income of $10 billion per year in the future, and its tax rate was 30%, what was the present value of these acquired tax loss carryforwards given acost of capital of 8%?The present value of these acquired tax loss carryforwards is $bilion (Round to two decimal places)

The tax shield provided by carryforwards refers to the reduction in a company's taxable income…

Answered: In September 2008, the IRS changed tax…

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter11: The Corporate Income Tax

Section: Chapter Questions

Problem 11MCQ

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Your firm has 2 deferred tax assets newly originated in 2023: One related to warranty expenses: your firm expensed $150,000 under GAAP and deducted $25,000 in its taxes; and • One related to inventory impairment: your firm recorded a loss of $48,000 under GAAP; for taxes, inventory losses aren't deductible until the inventory is sold or discarded. Your firm's management conducts an assessment of each deferred tax asset on 12/31/2023. Management finds: It is more likely than not that the firm will realize the entire warranty deferred tax asset. • It is more likely than not that the firm will realize only $5,000 of the inventory deferred tax asset. In 2023 your firm's taxable income is $260,000 and the statutory tax rate is 25%. There are no other permanent or temporary differences in 2023. Prepare your firm's 2023 income taxes entry on 12/31/2023.
In September 2008, the IRS changed tax laws to allow banks to utilize the tax loss carryforwards of banks they acquire to shield up to 100% of their future income from taxes (prior law restricted the ability of acquirers to use these credits). Suppose Fargo Bank acquired Covia Bank and with it acquired $58 billion in tax loss carryforwards. If Fargo Bank was expected to generate taxable income of $8 billion per year in the future, and its tax rate was 30%, what was the present value of these acquired tax loss carryforwards given a cost of capital of 8%? How would the present value change under current law which restricts the amount of the deduction to 80% of pre-tax income? Question content area bottom Part 1 If Fargo Bank was expected to generate taxable income of $8 billion per year in the future, and its tax rate was 30%, what was the present value of these acquired tax loss carryforwards given a cost of capital of 8%? The present value of these acquired tax loss…
First Bank has some questions as to the tax-free nature of $5 million of governmental bonds held in its investment portfolio. This amount is excluded from First Bank's taxable income of $55 million. Management has determined that there is a 65% chance that the tax-free status of this entire amount of interest can't withstand scrutiny of tax-ing authorities. Assuming a 25% tax rate, what amount of income tax expense should the bank report?
In September 2008, the IRS changed tax laws to allow banks to utilize the tax loss carryforwards of banks they acquire to shield their future income from taxes (prior law restricted the ability of acquirers to use these credits). Suppose Fargo Bank acquires Covia Bank and with it acquires $74 billion in tax loss carryforwards. If Fargo Bank is expected to generate taxable income of 10 billion per year in the future, and its tax rate is 30%, what is the present value of these acquired tax loss carryforwards given a cost of capital of 8%? NOTE: Assume that the firm can use tax lass carryforwards to write-off 100% of its earnings
First Bank has some question as to the tax-free nature of $5 million of its municipal bond portfolio. This amount is excluded from First Bank’s taxable income of $55 million. Management has determined that there is a 65% chance that the tax-free status of this interest can’t withstand scrutiny of taxing authorities. Assuming a 40% tax rate, what amount of income tax expense should the bank report?
Perkin Corporation has determined that it qualifies for a tax credit in the amount of $120,000. For the current year, it has tax liability before credits of $75,000. It expects at least that amount of tax liability next year. Required: If the excess credit is not refundable but may be carried forward, calculate the value of the credit. Assume Perkins uses a 4 percent discount rate to calculate present value. If the excess credit is refundable, what is the value of the credit?
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In 2024 , AutoUSA Inc. received $ 4,600,000 of book income , including $ 20,000 of interest income from tax - exempt bonds . AutoUSA reported $ 3,600,000 of regular business expenses . If it made $ 210,000 of estimated tax payments ( prepayments ) throughout the tax year , what is its tax due or tax refund when it files its return ?
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, Lapwing Corp. reported a tax loss in 2022 of $2,130,000. If the enacted tax rate for 2020 and 2021 was 20%; 25% for 2022; and 24% for 2023 and thereafter, how much should Lapwing Corp. record as a tax receivable if they were able to use all of their NOL as a carryback? ( O $532,500 O $426,000 O $106,500 O $639,000 A

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