Document35 (3)

When DTA reverses, income tax payable is reduced, while when DTL reverses, income tax payable is increased. TRUE OR FALSE

It has been suggested that tax policy favors deductions for AGI compared to deductions from AGI (Itemized Deductions). For this discussion, describe two (2) ways in which deductions for AGI are treated more favorably than itemized deductions.  Provide at least two (2) examples of each type of deduction (for AGI and from AGI)

not use ai please

An unused tax loss will arise when:   a. Expenses deductible for tax purposes are less than the taxable income   b. Expenses deductible for tax purposes exceeds the taxable income.   c. Expenses deductible for tax purposes are equal to the taxable income   d. Expenses deductible for tax purposes do not exist.

Where the carrying amount of an asset or liability is different from the tax base a ‘temporary difference’ can arise. Identify the correct statement pertaining to a temporary difference. Select one: a. A temporary difference only occur if the carrying amount of an asset or liability is the same as the tax base b. A temporary difference can never be taxable. c. A temporary difference can never be deductible for tax purposes. d. A temporary difference will result in a decrease (increase) in income tax payable (recoverable) in future periods when the carrying amount of the asset or liability is recovered or settled.

An above-the-line deduction reduces both adjusted gross income and taxable income.  True or false

Tax losses can be viewed as providing: Answer deductible temporary differences, and
therefore deferred tax liabilities  b.taxable temporary differences, and
therefore a current tax liability c.taxable temporary differences, and
therefore a current tax refund  d.deductible temporary differences, and therefore a deferred tax asset

* Your answer is incorrect. All of the following are procedures for the computation of deferred income taxes except to determine taxes payable. measure the total deferred tax liability for deductible temporary differences. • measure the total deferred tax liability for taxable temporary differences. identify the types and amounts of existing temporary differences.

1. cont... Listed below are items that are commonly accounted for differently for financial reporting purposes than they are for tax purposes.For each item below, indicate whether it involves: 1.   A temporary difference that will result in future deductible amounts and, therefore, will usually give rise to a deferred income tax asset. 2.   A temporary difference that will result in future taxable amounts and, therefore, will usually give rise to a deferred income tax liability. 3.   A permanent difference.   (e)                                                                 Installment sales of investments are accounted for by the accrual method for financial reporting purposes and the installment method for tax purposes. (f)                                                                 For some assets, straight-line depreciation is used for both financial reporting purposes and tax purposes, but the assets’ lives are shorter for tax purposes. (g)…

The basic issue in deciding whether to record a valuation allowance for a deferred tax asset is determining whether it is more likely than not if future taxable income will be sufficient to realize the tax benefit. True or False True False

Listed below are items that are commonly accounted for differently for financial reporting purposes than they are for tax purposes.For each item below, indicate whether it involves: 1.   A temporary difference that will result in future deductible amounts and, therefore, will usually give rise to a deferred income tax asset. 2.   A temporary difference that will result in future taxable amounts and, therefore, will usually give rise to a deferred income tax liability. 3.   A permanent difference. Use the appropriate number to indicate your answer for each. (a)                                                                 The MACRS depreciation system is used for tax purposes, and the straight-line depreciation method is used for financial reporting purposes for some plant assets. (b)                                                                 A landlord collects some rents in advance. Rents received are taxable in the period when they are received. (c)…

A purpose of an adjustment to income is to (option: a.reduce gross income? b. help determine gross income? c. reduce tax owed after tax has been determined?). Another purpose of an adjustment to income is to (option: a. help determine adjusted gross income? b. calculate taxable income after agi has been determined? c. be subtracted after agi to help determine taxable income?)