Corporation, a cash basis taxpayer, received $10,000 from a customer in 2019. In that year, the customer filed a claim for a refund of the fee. In 2020, Yard refunded the customer $6,000. In 2019, Yard paid $5,000 in estimated state income tax. In May 2020, Yard received a state income tax refund of $2,000 for overpayment of its 2019 income tax. Yard was in the 35% marginal tax bracket in 2019 and in the 15% marginal tax bracket in 2020. What are the tax effects of the 2020 payment to the customer and the collection of the state income taxes overpaid?
Corporation, a cash basis taxpayer, received $10,000 from a customer in 2019. In that year, the customer filed a claim for a refund of the fee. In 2020, Yard refunded the customer $6,000. In 2019, Yard paid $5,000 in estimated state income tax. In May 2020, Yard received a state income tax refund of $2,000 for overpayment of its 2019 income tax. Yard was in the 35% marginal tax bracket in 2019 and in the 15% marginal tax bracket in 2020. What are the tax effects of the 2020 payment to the customer and the collection of the state income taxes overpaid?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Yard Corporation, a cash basis taxpayer, received $10,000 from a customer in 2019. In that year, the customer filed a claim for a refund of the fee. In 2020, Yard refunded the customer $6,000. In 2019, Yard paid $5,000 in estimated state income tax. In May 2020, Yard received a state income tax refund of $2,000 for overpayment of its 2019 income tax. Yard was in the 35% marginal tax bracket in 2019 and in the 15% marginal tax bracket in 2020. What are the tax effects of the 2020 payment to the customer and the collection of the state income taxes overpaid?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education