Tax Drill - AMT and Depreciation In 2019, Brennen sold a machine used in his business for $180,000. The machine was purchased eight years ago for $340,000. Depreciation up to the date of the sale for regular income tax purposes was $210,000 and $190,000 for AMT purposes. For AMT purposes, Brennen has a negative  adjustment of $fill in the blank 2 related to the sale.

A long-term asset was purchased at the beginning of 2021. It has a 2-year life and no salvage value. The company uses straight-line method for financial purpose and accelerated depreciation method for tax purpose.   For tax purpose, 2021’s depreciation is $480 and 2022’s depreciation is $270. Please compute straight-line depreciation for financial purpose on your own. It should be ($480 + $270) and divided by 2.     Assuming taxable income for 2021 is $477,000, 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?

On April 1, 2024, Titan Corporation purchases office equipment for $50,000. For tax reporting, the company uses MACRS and classifies the equipment as 5-year personal property. In 2024, this type of equipment is eligible for 60% first-year bonus depreciation. For financial reporting, the company uses straight-line depreciation. Assume the equipment has no residual value.Required: Calculate annual depreciation for the five-year life of the equipment according to MACRS. The company uses the half-year convention for tax reporting purposes.Calculate annual depreciation for the five-year life of the equipment according to straight-line depreciation. The company uses partial-year depreciation based on the number of months the asset is in service for financial reporting purposes. In which year(s) is tax depreciation greater than financial reporting depreciation?

Lax LLC purchased only one asset during the current year (a full 12-month tax year). On August 26 Lax placed in service computer equipment (five-year property) with a basis of $28,000. Calculate the maximum depreciation expense for the current year (ignoring §179 and bonus depreciation).    Question 1 options:   $4,458   None of the choices are correct.   $4,600   $5,600   $3,600

Computing and Reporting Deferred Income TaxesEarly in January 2019, Oler, Inc., purchased equipment costing $24,000. The equipment had a 2‑year useful life and was depreciated in the amount of $12,000 in 2019 and 2020. Oler deducted the entire $24,000 on its tax return in 2019. This difference was the only one between its tax return and its financial statements. Oler’s income before depreciation expense and income taxes was $354,000 in 2019 and $367,500 in 2020. The tax rate in each year was 25%. Requireda. What amount of deferred tax liability should Oler report in 2019 and 2020? 2019   2020     b. Prepare the journal entries to record income taxes for 2019 and 2020. General Journal Description Debit Credit       Income taxes payable           To record income taxes for 2019.     Income tax expense                 To record income taxes for 2020.     c. Repeat requirement b if in 2019 the U.S. enacts a permanent tax rate change to be effective in…

On November 4, 2019, Blue Company acquired an asset (27.5-year residential real property) for $200,000 for use in its business. In 2019 and 2020, respectively, Blue deducted $642 and $5,128 of cost recovery. These amounts were incorrect; Blue applied the wrong percentages (i.c., those for 39 year rather than 27.5 year assets). Blue should have taken $910 and $7,272 cost recovery in 2019 and 2020, respectively. On January 1, 2021, the asset was sold for $180,000. If required, round all computations to the nearest dollar. Click here to access the depreciation tables in the textbook. a. The adjusted basis of the asset at the end of 2020 is $ b. The cost recovery deduction for 2021 is $ c. The loss on the sale of the asset in 2021 is

Oriole Company purchased equipment that cost $2595000 on January 1, 2020. The entire cost was recorded as an expense. The equipment had a 9-year life and a $103800 residual value. Oriole uses the straight-line method to account for depreciation expense. The error was discovered on December 10, 2022. Oriole is subject to a 30% tax rate. Oriole’s net income for the year ended December 31, 2020, was understated by $2595000. $2318200. $1816500. $1622740.

Oriole Corporation purchased a machine on January 2, 2020, for $4300000. The machine has an estimated 5-year life with no salvage value. The straight-line method of depreciation is being used for financial statement purposes and the following MACRS amounts will be deducted for tax purposes: 2020 $860000 2023 $494500 2021 1376000 2024 494500 2022 825600 2025 249400 Assuming an income tax rate of 20% for all years, the net deferred tax liability that should be reflected on Oriole's balance sheet at December 31, 2021 be $103200 $73100 $0 $6880

On 1 January 20X8 Davidoff Co decided to revalue its land for the first time. A qualified property valuer reported that the market value of the land on that date was $45,000. The land was originally purchased 6 years ago for $32,000 The required provision for income tax for the year ended 31 December 20X8 is $15,500. The difference between the carrying amounts of the net assets of Davidoff (including the revaluation of the land above) and their (lower) tax base at 31 December 20X8 is $38,000. The opening balance on the deferred tax account was $5,500. Davidoff’s rate of income tax is 30%. Required Prepare extracts of the financial statements to show the effect of the above transactions.

Zaki LLC purchased computer equipment (five-year property) on April 20, 2018, for $36,000 and used the half-year convention to depreciate it. Zaki did not take Section 179 or bonus depreciation in the year it acquired the furniture. In 2021, which is the fourth year Zaki LLC owned the property, the property was disposed of on November 10. What is Zaki's depreciation expense for 2021? MACRS tables.pdf O $518. O $2,074. O $2,248. O $4,147.