Concept explainers
a.
Introduction: To operate a business, a taxpayer generally chooses between individual trading,
The tax return due date of 2019.
b.
Introduction: To operate a business, a taxpayer generally chooses between individual trading, partnership, and corporation form of entity. The corporations can be of either S Corporation or C Corporation. The taxpayer needs to understand his business requirements properly for the smooth continuance of his business since each form of entity has different tax treatment. After 2018, a new 21 percent rate of tax was introduced for corporations. Corporations must include in ordinary taxable income all net capital gains income during the year for tax purposes and then the income taxed at a regular rate except in certain rare circumstances.
The tax return due date of 2019, in case an extension, is requested.
c.
Introduction: To operate a business, a taxpayer generally chooses between individual trading, partnership, and corporation form of entity. The corporations can be of either S Corporation or C Corporation. The taxpayer needs to understand his business requirements properly for the smooth continuance of his business since each form of entity has different tax treatment. After 2018, a new 21 percent rate of tax was introduced for corporations. Corporations must include in ordinary taxable income all net capital gains income during the year for tax purposes and then the income taxed at a regular rate except in certain rare circumstances.
The tax return due date for paying additional taxes of 2019, in case extension is requested.
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Income Tax Fundamentals 2020
- Quince Corporation has taxable income of $485,000 for its calendar tax year. Calculate the corporation's income tax liability for 2019 before tax credits. $________________arrow_forwardOn December 31, 2023, XYZ Inc. has an account payable of $2,000 for operating expenses incurred during the year. These expenses are only tax deductible when paid. XYZ normally pays for its operating expenses one month after they are incurred. Assuming a 20% tax rate, these expenses will result in: Multiple Choice О A deferred tax liability of $2,000. A deferred tax liability of $400. A deferred tax asset of $400. A deferred tax asset of $2,000.arrow_forwardIn 2021, the company accrued wages payable $68,000 and will make the payment in 2022. Taxable income for 2021 is $600,000, the enacted tax rate is 20% for all years, this is the only difference between pretax financial income and taxable income, and there were no deferred taxes at the beginning of 2021. What amount of income tax expense should the company report at the end of 2021?arrow_forward
- Sheridan, Inc. had pre-tax accounting income of $3200000 and a tax rate of 20% in 2021, its first year of operations. During 2021 the company had the following transactions: Received rent from Jane, Co. for 2022 $101000 Municipal bond income $125000 Depreciation for tax purposes in excess of book depreciation $65000 Installment sales profit to be taxed in 2022 $167000 At the end of 2021, which of the following deferred tax accounts and balances exist at December 31, 2021?arrow_forwardChateau Corporation has reported pre-tax income of $250,000 on December 31, 2021, before considering the transactions and events noted below. Prepare the adjusting entries needed at December 31, 2021 in order to correctly report Chateau's pre-tax income for the year. On September 1, 2021, Chateau signed a one-year, $36,000 note payable with interest of 7%. The note, plus accrued interest, is due on August 31, 2022. On May 31, 2021, Chateau entered into a contract to provide services to a customer for eighteen months, beginning on June 1. The customer paid the $27,000 fee in full on June 1, and Chateau recorded the payment as unearned revenue. On August 1, 2021, Chateau paid a year's rent in advance on a storage facility and debited the $48,000 payment to Prepaid Rent. Depreciation on office equipment is $18,000. The December utilities bill had not been received as of December 31. The company has equalized billing for its utilities, and each month's bill is $950.arrow_forwardIn 2021, a company accrued salaries expense. It will make the payment in 2022. At the end of 2021, as a result of this transaction, the company will __________. (Enter 1, 2, 3, or 4 that represents the correct answer). 1. record a deferred tax asset. 2. record a deferred tax liability. 3. have a permanent difference in pretax financial income and taxable income for 2021. 4. have no differences in pretax financial income and taxable income for 2021.arrow_forward
- Jennings Inc. reported the following pretax income (loss) and related tax rates during the years 2019–2022. Pretax Income (loss) Tax Rate 2019 $80,000 40 % 2020 (180,000) 40 % 2021 230,000 20 % 2022 100,000 20 % Pretax financial income (loss) and taxable income (loss) were the same for all years since Jennings began business. The tax rates from 2019–2022 were enacted in 2019. Prepare the portion of the income statement, starting with “Operating loss before income taxes,” for 2020. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)arrow_forwardEstimated Tax Requirement. Zeta Corporation's taxable income for 2019 was $1.1 million, on which Zeta paid federal income taxes of $231,000. Zeta estimates calendar year 2020’s taxable income to be $2 million, on which it will owe $420,000 in federal income taxes. a. What are Zeta's minimum quarterly estimated tax payments for 2020 to avoid an un- derpayment penalty? b. When is Zeta's 2020 tax return due? c. When are any remaining taxes due? What amount of taxes are due when Zeta files its return assuming Zeta timely pays estimated tax payments equal to the amount deter- mined in Part a? d. If Zeta obtains an extension to file, when is its tax return due? Will the extension per- mit Zeta to delay making its final tax payments?arrow_forwardJennings Inc. reported the following pretax income (loss) and related tax rates during the years 2019–2022. Pretax Income (loss) Tax Rate 2019 $80,000 40 % 2020 (180,000) 40 % 2021 230,000 20 % 2022 100,000 20 % Pretax financial income (loss) and taxable income (loss) were the same for all years since Jennings began business. The tax rates from 2019–2022 were enacted in 2019. Prepare the journal entries for the years 2020–2022 to record income taxes payable (refundable), income tax expense (benefit), and the tax effects of the loss carryforward. Assume that Jennings expects to realize the benefits of any loss carryforward in the year that immediately follows the loss year.arrow_forward
- Jennings Inc. reported the following pretax income (loss) and related tax rates during the years 2019–2022. Pretax Income (loss) Tax Rate 2019 $80,000 40 % 2020 (180,000) 40 % 2021 230,000 20 % 2022 100,000 20 % Pretax financial income (loss) and taxable income (loss) were the same for all years since Jennings began business. The tax rates from 2019–2022 were enacted in 2019. a. Prepare the journal entries for the years 2020–2022 to record income taxes payable (refundable), income tax expense (benefit), and the tax effects of the loss carryforward. Assume that Jennings expects to realize the benefits of any loss carryforward in the year that immediately follows the loss year. c. Prepare the portion of the income statement, starting with “Operating loss before income taxes,” for 2020. d. Prepare the portion of the income statement, starting with “Income before income taxes,” for 2021arrow_forwardJ-Matt, Inc., had pretax accounting income of $329,000 and taxable income of $372,000 in 2021. The only difference between accounting and taxable income is estimated product warranty costs of $43,000 for sales in 2021. Warranty payments are expected to be in equal amounts over the next three years (2022-2024) and will be tax deductible at that time. Recent tax legislation will change the tax rate from the current 25% to 20% in 2023. Determine the amounts necessary to record J-Matt's income taxes for 2021 and prepare the appropriate journal entry.arrow_forward1. A tax payer receives an assessment notice from the BIR informing him that his total deficiency tax is 25,000 that is due last April 15. Upon receiving the notice the tax payers immediately filed and pay his tax on August 15. How much would be the total amount due? 2. Income tax return for the calendar year 2019 was due for filing on April 15, 2021 but the tax payer voluntarily filed his return without assessment notice from the BIR on June 30, 2021. The tax due per return amounts to 280,000. How much would be the total amount due? 3. The taxpayer's 2020 income tax return is to be filed through authorized agent bank under the jurisdiction of RDO East Manila. Without prior authorization from the BIR, the taxpayer filed his tax return and paid the tax through the authorized agent bank under the jurisdiction of RDO Laoag City? The tax due per return is 100,000. How much would be the total amount due? 4. In connection with problem number 3, the taxpayer also filed his return 3 months…arrow_forward
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT