Lento Incorporated owned machinery with a $30,000 initial cost basis. Accumulated book depreciation with respect to the machinery was $12,000, and accumulated tax depreciation was $19,100. Lento sold the machinery for $13,000 cash. Lento’s marginal tax rate is 21 percent. Required: b. Compute Lento’s tax gain or loss on the sale. c. Compute Lento’s after-tax cash flow from the sale.

The Grape Corporation owns equipment with a $400,000 adjusted basis. The equipment was purchased six years ago for $640,000. Assume Grape sells the equipment for the selling prices given in the three independent cases below. View the three independent cases. Read the requirement. Begin by entering the amount of the recognized gain for each case. Then enter the character of the gain or loss for each case. (Use a minus sign or parentheses to enter a loss. Complete all input fields. Enter a "0" for any zero-balances.) Case A Case B Case C Selling Price $237,000 $729,000 $424,000 Recaptured Recognized Gain Ordinary Gain Sec. 1231 Gain (Loss) (Loss) (Loss) Three Independent Cases Selling Price Case A S 237,000 Case B 729,000 Case C 424,000 Print Done X

Simpson company purchased an asset by paying $50,000 cash and giving the seller a promissory note which requires payment of the remaining balance of $300,000 over 3 years. The company's book basis and tax basis in the asset is $350,000. TRUE or FALSE

Shimmer Incorporated is a calendar-year-end, accrual-method corporation. This year, it sells the following long-term assets: Accumulated Depreciation $ 40,000 n/a Asset Building Sparkle Corporation stock Description Taxable income Tax liability Shimmer does not sell any other assets during the year, and its taxable income before these transactions is $854,000. What are Shimmer's taxable income and tax liability for the year? Sales Price $ 704,000 136,000 Amount Cost $ 693,000 187,000

Compute the following. 1. Total gain. 2. Contract price. 3. Payments received in the year of sale. 4. Recognized gain in the year of sale and the character of such gain. а. (Hint: Think carefully about the manner in which the property taxes are han- dled before you begin your computations.) b. Same as parts (a)(2) and (3), except that Kay's basis in the property was $35,000.

During the year, Belyk Paving Co. had sales of $2,600,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,535,000, $465,000, and $520,000, respectively. In addition, the company had an interest expense of $245,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.) (Enter your answer as directed, but do not round intermediate calculations.) Required: (a) What is Belyk's net income? (Negative amount should be indicated by a minus sign.) Net income (b) What is Belyk's operating cash flow? Operating cash flow A

At the beginning of 2021, Pharoah Co. purchased an asset for $1400000 with an estimated useful life of 5 years and an estimated salvage value of $142000. For financial reporting purposes the asset is being depreciated using the straight-line method; for tax purposes the double-declining-balance method is being used. Pharoah Co's tax rate is 20% for 2021 and all future years. At the end of 2021, which of the following deferred tax accounts and balances is reported on Pharoah's balance sheet? Account Deferred tax liability Deferred tax liability Deferred tax asset Balance $61680 $50320 $61680

Lanco Corporation, an accrual-method corporation, reported taxable income of $2,020,000 this year. Included in the computation of taxable income were the following items: MACRS depreciation of $301,000. Depreciation for earnings and profits purposes is $193,000. A net capital loss carryover of $20,100 from last year. A net operating loss carryover of $26,500 from last year. $60,600 capital gain from the distribution of land to the company’s sole shareholder (see below). Not included in the computation of taxable income were the following items: Tax-exempt income of $5,300. Life insurance proceeds of $340,000. Excess current-year charitable contribution of $2,600 (to be carried over to next year). Tax-deferred gain of $27,700 on a like-kind exchange. Nondeductible life insurance premium of $2,900. Nondeductible interest expense of $2,100 on a loan used to buy tax-exempt bonds. Lanco's accumulated E&P at the beginning of the year was $2,870,000. During the year, Lanco made the…

Li Corporation reported pretax book income of $660,000. Tax depreciation exceeded book depreciation by $412, 000. Li's beginning book (tax) basis in its fixed assets was $1,960,000 ($1,748, 000) and its ending book (tax) basis is $1,860,000 ($1, 272, 000). In addition, the company received $360, 000 of tax-exempt municipal bond interest. The company's prior - year tax return showed taxable income of $49,000. Assuming a tax rate of 21 percent, compute the company's deferred income tax expense or benefit.

Mallow Incorporated, which has a 21% tax rate, purchased a new business asset. First-year book depreciation was $37,225, and first-year MACRS depreciation was $55,025. As a result of this book/tax difference, Mallow recorded a $3,738 deferred tax asset. True or False True False