MCGRAW-HILL'S TAX.OF INDIV.+BUS.2020
20th Edition
ISBN: 9781259969614
Author: SPILKER
Publisher: MCG
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Question
Chapter 16, Problem 32P
To determine
Determine the book – tax difference for Corporation S.
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Nalad Corp. provided the following data related to accounting and taxable income:
Pre-tax accounting income (financial statements)
Taxable income (tax return)
Income tax rate
20X8
$530,000
20X9
$505,000
305,000
730,000
38%
38%
There are no existing temporary differences other than those reflected in these data. There are no permanent differences.
Required:
1-a. How much tax expense would be reported in each year if the taxes payable method was used?
Tax Expense
20X8
20X9
1-b. What is the implied tax rate? (Round your answers to 1 decimal place.)
20X8
20X9
Implied tax rate
96
%
2-a. How much tax expense would be reported using comprehensive tax allocation (liability method).
Tax Expense
20X8
20X9
2-b. How much deferred income tax would be reported using comprehensive tax allocation (liability method).
On its year 1 financial statements, Seatax Corporation, an accrual-method taxpayer, reported federal income tax expense of $570,000.
On its year 1 tax return, it reported a tax liability of $650,000. During year 1, Seatax made estimated tax payments of $700,000.
What book-tax difference, if any, associated with its federal income tax expense should Seatax have reported when computing its
year 1 taxable income? Is the difference favorable or unfavorable? Is it temporary or permanent?
Year 1
Book-tax
Difference
Favorable or
Unfavorable
Temporary or
Permanent
Which of the following statements is correct regarding current and deferred tax expense?
O A. Deferred tax expense is equal to the change in deferred tax liability or asset from
the beginning
of the year to the end of the year
B. Current tax expense is equal to the income taxes payable on the corporate tax
return, assuming
no estimated tax payments were made.
C. Total tax expense is equal to the current tax expense plus deferred tax expense
minus deferred
tax benefit during the year
O D. All of these statements are correct regarding current and deferred tax expense.
Chapter 16 Solutions
MCGRAW-HILL'S TAX.OF INDIV.+BUS.2020
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- Barth James Inc. has the following deferred tax assets and liabilities: 12,000 noncurrent deferred tax asset, and 10,500 noncurrent deferred tax liability. Show how Barth James would report these deferred tax assets and liabilities on its balance sheet.arrow_forwardAlvis Corporation reports pretax accounting income of $400,000, but due to a single temporary difference, taxable income is only $250,000. At the beginning of the year, no temporary differences existed. Required: 1. Assuming a tax rate of 25%, what will be Alvis's net income?2. What will Alvis report in the balance sheet pertaining to income taxes?arrow_forwardThe following transactions were made by Company X during the current fiscal year. Explain whether or not each transaction is tax deductible under the ITAA for each transaction.arrow_forward
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