Lanco Corporation, an accrual-method corporation, reported taxable income of $1,600,000 this year. Included in the computation oftaxable 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 made the following distributions to itssole shareholder, Luigt:• June 30: $81,000.• September 30: Parcel of land with a fair market value of $96,750. Lanco's adjusted tax basis in the land was $19,200. Luigiassumed an existing mortgage on the property of $21,600.Required:a. Compute Lanco's current E&P.b. Compute the amount of dividend Income reported by Luigi this year because of the distributions.c. Compute Lanco's accumulated E&P at the beginning of next year.a. Current E&Pb. Dividend incomec. Accumulated E&P, beginning of next yearS156,150

Tax-Free Bonds -A government agency issues tax-free bonds to collect money for a certain purpose.…

anco Corporation, an accrual-method corporation, reported taxable income of $1,600,000 this year. Included in axable 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). lot 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

anco Corporation, an accrual-method corporation, reported taxable income of $1,600,000 this year. Included in axable 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). lot 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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Bonita Industries reported net income of $537000 for the year ended 12/31/21. Included in the computation of net income were: depreciation expense, $90100; amortization of a patent, $48500; income from an investment in common stock of Sandhill Co., accounted for under the equity method, $71400; and amortization of a bond premium, $18400. Bonita also paid a $123000 dividend during the year. The net cash provided by operating activities would be reported at $365500. $488500. $585800. $462800.
Petrilli Ltd. had a taxable loss of $3,600,000 in 20X8 and a further loss of $140,000 in 20X9. The tax rate in 20X8 was 32% and in 20X9, 33%. All rates are enacted in the year to which they pertain. In the three years before the losses, the company had the following taxable income and tax rates: 20X5 20X6 20X7 Taxable income $ 1,267,200 $ 1,368,000 $ 488,400 Tax rate 36 % 38 % 40 % There are no temporary differences other than those created by income tax losses. The company was struggling due to a competitor entering the market. Required:1. What is the amount of refund that will be claimed in 20X8? 2. What is the amount of the loss carryforward in 20X8? 3. Assuming that loss carryforward usage is probable in each year, prepare a journal entry for income tax in 20X8 and 20X9. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 4. Assuming that loss carryforward usage is not probable in…
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Shimmer Incorporated is a calendar-year-end, accrual-method corporation. This year, it sells the following long-term assets: Accumulated Depreciation $ 54,000 n/a Sales Price Building Sparkle Corporation stock $ 703,000 138,000 Shimmer does not sell any other assets during the year, and its taxable income before these transactions is $820,000. What are Shimmer's taxable income and tax liability for the year? Asset Description Taxable income Tax liability S Amount 820,000 172.200 Cost $ 657,000 238,000
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t ces Hafnaoui Company reported pretax net income from continuing operations of $1,168,000 and taxable income of $695,500. The book-tax difference of $472,500 was due to a $315,000 favorable temporary difference relating to depreciation, an unfavorable temporary difference of $126,000 due to an increase in the reserve for bad debts, and a $283,500 favorable permanent difference from the receipt of life insurance proceeds. At the end of the year, the reserve for bad debts had a balance of $157,500; the beginning balance in the account was $31,500. Hafnaoui's beginning book (tax) basis in its fixed assets was $1,046,000 ($869,000) and its ending book (tax) basis is $1,615,000 ($1,123,000). Problem 17-77 Part b (Algo) b. Compute Hafnaoui Company's deferred income tax expense or benefit. Note: Enter all numbers as a positive number and indicate whether a deferred tax expense or a deferred tax benefit.
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