Abbot Corporation reported a net operating loss of $450,000 in 20X3, which the corporation elected to carryforward to 20X4. Included in the computation of the taxable loss was regular depreciation of $150,000 (E&P depreciation is $65,000), first year expensing under $179 of $55,000, and a dividends received deduction of $10,500. The corporation's current earnings and profits for 20X3 would be: 1) ($310,500). 2) ($354,500). 3) ($450,000) 4) ($570,000).
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- 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…Lanco Corporation, an accrual-method corporation, reported taxable income of $1,460,000 this year. Included in the computation of taxable income were the following items: MACRS depreciation of $200,000. Depreciation for earnings and profits purposes is $120,000.A net capital loss carryover of $10,000 from last year.A net operating loss carryover of $25,000 from last year.$65,000 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 $5,000.Life insurance proceeds of $250,000.Excess current-year charitable contribution of $2,500 (to be carried over to next year).Tax-deferred gain of $20,000 on a like-kind exchange.Nondeductible life insurance premium of $3,500.Nondeductible interest expense of $1,000 on a loan used to buy tax-exempt bonds.Lanco’s accumulated E&P at the beginning of the year was $2,400,000. During the year, Lanco made the following…Lanco Corporation, an accrual-method corporation, reported taxable income of $1,600,000 this year. Included in the computation of taxable income were the following items: • MACRS depreciation of $226,000. Depreciation for earnings and profits purposes is $133,000. • A net capital loss carryover of $14,000 from last year. • A net operating loss carryover of $28,900 from last year. • $77,550 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 $9,650. • Life Insurance proceeds of $259,000. • Excess current-year charitable contribution of $2,800 (to be carried over to next year). • Tax-deferred gain of $21,000 on a like-kind exchange. . • Nondeductible life insurance premium of $4,100. • Nondeductible Interest expense of $3,900 on a loan used to buy tax-exempt bonds. Lanco's accumulated E&P at the beginning of the year was $3,050,000. During the year,…
- Lanco Corporation, an accrual-method corporation, reported taxable income of $1,720,000 this year and paid Federal income tax of $361,200. Included in the computation of taxable income were the following items: • MACRS depreciation of $253,000. Depreciation for earnings and profits purposes is $124,000. • A net capital loss carryover of $13,700 from last year. • A net operating loss carryover of $31,000 from last year. $76,750 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 $8,600. • Life insurance proceeds of $267,000. • Excess current-year charitable contribution of $2,300 (to be carried over to next year). • Tax-deferred gain of $21,300 on a like-kind exchange. • Nondeductible life insurance premium of $4,700. • Nondeductible interest expense of $3,600 on a loan used to buy tax-exempt bonds. . Lanco's accumulated E&P at the beginning of the…During the current year, Hill Corporation sold equipment for $600,000 (adjusted basis of $360,000). The equipment was purchased a few years ago fo $760,000 and $400,000in MACRS deductions have been claimed. ADS depreciation would have been $300,000. As a result of the sale, the adjustment to taxable income needed to determine current E & P is A) No agjustment is required B) Subtract $100,000 C) Add $100,000 D) Add $80,000 E) None of the aboveIn its first year, Firm KZ recognized $457,500 ordinary business income and a $13,250 loss on the sale of an investment asset. In its second year, Firm KZ recognized $518,000 ordinary business income, a $20,350 Section 1231 gain, and a $8,070 Section 1231 loss on two sales of operating assets. Required: a. Compute KZ's book and taxable income for its first year. b. Using a 21 percent tax rate, compute KZ's deferred tax asset or liability (identify which) on its balance sheet on the last day of the year. c. Compute KZ's book and taxable income for its second year. d. Compute KZ's deferred tax asset or liability (identify which) on its balance sheet on the last day of the second year. Answer is not complete. Complete this question by entering your answers in the tabs below. Req A and B Req C and D c. Compute KZ's book and taxable income for its second year. d. Compute KZ's deferred tax asset or liability (identify which) on its balance sheet on the last day of the second year. Note:…
- Firm OCS sold business equipment with a $20,000 initial cost basis and $7,315accumulated tax depreciation. In each of the following cases, compute OCS’srecaptured ordinary income and Section 1231 gain or loss on the sale.Required:a. Amount realized was $10,000.b. Amount realized was $13,000.c. Amount realized was $17,500.d. Amount realized was $22,500Jahlil Corporation has GAAP net income of $4,670,000,000. To compute Jahlil's AFSI, the following items may require adjustment: • Federal income tax expense for book purposes totals $1,074,100,000. • MACRS depreciation is $950,000,000; book depreciation is $564,000,000. • Book net operating loss carryforwards total $330,000,000. Required: a. Compute Jahlil Corporation's AFSI. b. If Jahlil's regular tax liability is $747,500,000, compute the corporation's tentative minimum tax, AMT, and total tax liability. Complete this question by entering your answers in the tabs below. Required A Required B J If Jahlil's regular tax liability is $747,500,000, compute the corporation's tentative minimum tax, AMT, and total tax liability. $544,520,000 Tentative minimum tax AMT Total tax liabilityLi 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.
- The outstanding balance of excess of MCIT over RCIT in prior period is P100,000. During the current taxable year, the corporation has a gross income of P8,000,000 and operating expenses of P7,850,000. What is the unused excess MCIT as of the end of the current taxable year? 142,500 150,000 222,500 230,000 None of the aboveABC Ltd., a private company, can report in accordance with either ASPE or IFRS. On January 1, Year 1, it acquired an asset at a cost of $11.1 million, which will be amortized on a straight-line basis over an estimated useful life of 25 years. On January 1, Year 3, the company hired an appraiser, who determined the fair value of the asset (net of accumulated depreciation) to be $13.8 million. The estimated useful life of the asset did not change. Required: (a)Determine the depreciation expense recognized in Year 2, Year 3, and Year 4 under (i) The revaluation treatment allowed under IAS 16, and IAS 16 Year 2$ Year 3$ Year 4$ (ii) ASPE. ASPE Year 2$ Year 3$ Year 4$ (b) Determine the carrying amount of the asset under the two different sets of accounting requirements at January 2, Year 3; December 31, Year 3; and December 31, Year 4. Jan 2/Yr3 Dec31/Yr3 Dec31/Yr4 (c) Determine the differences in profit and…Ayres Services acquired an asset for $82 million in 2018. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS. The enacted tax rate is 40%. Amounts for pretax accounting income, depreciation, and taxable income in 2018, 2019, 2020, and 2021 are as follows: Pretax accounting income Depreciation on the income statement Depreciation on the tax return. Taxable income. ($ in millions) 2019 355 $ 20.5 (33.5) Temporary Difference Deferred Tax Liability 2018 $ 335 $ 20.5 (25.5) $ 330 $ 342 $ 375 2020 2021 370 $ 405 20.5 20.5 (15.5) (7.5) $ 418 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…