TPW, a calendar year taxpayer, sold land with a $549,000 tax basis for $845,000 in February. The purchaser paid $84,500 cash at closing and gave TPW an interest-bearing note for the $760,500 remaining price. In August, TPW received a $60,825 payment from the purchaser consisting of a $38,025 principal payment and a $22,800 interest payment. In the first year after the year of sale, TPW received payments totaling $116,650 from the purchaser. The total consisted of $76,050 principal payments and $40,600 interest payments. Required: For the first year after the year of sale, compute the difference between TPW’s book and tax income resulting from the installment sale method. Is this difference favorable or unfavorable? Using a 21 percent tax rate, determine the effect of the difference on the deferred tax asset or liability generated in the year of sale.

smile zone professional corporation operates a dental practice with a december 31 fiscal year end. during the current year, an asset with a capital cost of $25,000 is sold for $22,000. there are no other dispositions during the year and there are several assets remaining in Class 8. What are the tax consequences of this disposition?

A rental apartment complex (MACRS-GDS 27.5-year property) is placed in service by a calendar-year taxpayer on January 4 for $200,000. If the apartments are kept for 5 years and 2 months (sold on March 6), determine the depreciation deduction during each of the 6 tax years involved usingMACRS-GDS allowances.

On October 3, Kim Bailey paid $250,000 for a residential rental property. Thispurchase price represents $200,000 for the building and $50,000 for the land.Five years later, on June 25, she sold the property for $250,000. Compute theMACRS depreciation for each of the five calendar years during which she hadthe property.

Jan purchases taxable bonds with a face value of $250,000 for $265,000. The annual interest paid on the bonds is $10,000. Assume Jan elects to amortize the bond premium. The total premium amortization for the first year is $1,600.   What is Jan’s interest income for the first year? What is Jan’s interest deduction for the first year? What is Jan’s adjusted basis for the bonds at the end of the first year?

Case Development began operations in December 2018. When property is sold on an installment basis, Case recognizes installment income for financial reporting purposes in the year of the sale. For tax purposes, installment income is reported by the installment method. 2018 installment income was $780,000 and will be collected over the next three years. Scheduled collections and enacted tax rates for 2019–2021 are as follows: 2019 $186,000 30% 2020 340,000 40 2021 254,000 40 Case also had product warranty costs of $98,000 expensed for financial reporting purposes in 2018. For tax purposes, only the $29,000 of warranty costs actually paid in 2018 was deducted. The remaining $69,000 will be deducted for tax purposes when paid over the next three years as follows: $23, 600 30% 28, 600 16,800 2019 2020 40 2021 40 Pretax accounting income for 2018 was $1,080,0o0, which includes interest revenue of $28,000 from municipal bonds. The enacted tax rate for 2018 is 30%.

Ed borrowed $10,000 to purchase City of Valdosta bonds. This year, he received $600 in City of Valdosta Bond interest on the bonds purchased. He also paid $500 in interest on the $10,000 loan. How much of the interest on the loan is deductible?

Ayres Services acquired an asset for $96 million in 2021. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). Ayers deducted 100% of the asset's cost for income tax reporting in 2021. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022, 2023, and 2024 are as follows:   ($ in millions)     2021   2022   2023   2024   Pretax accounting income $ 480     $ 500     $ 515     $ 550     Depreciation on the income statement   24       24       24       24     Depreciation on the tax return   (96 )     (0 )     (0 )     (0 )   Taxable income $ 408     $ 524     $ 539     $ 574       Required:For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. (Leave no cell blank, enter "0" wherever applicable. Enter your answers…

Ayres Services acquired an asset for $116 million in 2018. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 40%. Amounts for pretax accounting income, depreciation, and taxable income in 2018, 2019, 2020, and 2021 are as follows: (S in millions) 2019 $ 420 $ 440 $ 455 29.0 2018 2020 2021 $ 490 Pretax accounting income Depreciation on the income statement Depreciation on the tax return 29.0 29.0 29.0 (34.0) (42.0) (24.0) 415 $ 427 (16.0) $ 503 Taxable income $ 460 Required: Determine (a) the temporary book-tax difference for the depreciable asset and (b) the balance to be reported in the deferred tax liability account. (Leave no cell blank, enter "0" wherever applicable. Show all amounts as positive amounts. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).) Beginning of 2018 End of…

On September 30, Silver Corporation, a calendar year taxpayer, sold a parcel of land (basis of $400,000) for a $1,000,000 note. The note is payable in five installments, with the first payment due next year. Because Silver did not elect out of the installment method, none of the $600,000 gain is taxed this year. Silver Corporation had a $300,000 deficit in accumulated E & P at the beginning of the year. Before considering the effect of the land sale, Silver had a deficit in current E & P of $50,000. Javiera, the sole shareholder of Silver, has a basis of $200,000 in her stock. Javiera holds the Silver Corporation stock as an investment. If Silver distributes $900,000 to Javiera on December 31, how much income must she report for tax purposes? If an amount is zero, enter "0". Javiera reports a $ basis is $ taxable dividend and of $ After the distribution, Javiera's stock