‘Income tax shall be paid on taxable income times tax rate. It makes sense to pay income tax for current year, but we should not be asked to account for deferred tax assets and liabilities’. Do you agree with this statement? Discuss your arguments.

‘Income tax shall be paid on taxable income times tax rate. It makes sense to pay income tax for current year, but we should not be asked to account for deferred tax assets and liabilities’. Do you agree with this statement? Discuss your arguments.

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter12: Alternative Minimum Tax

Section: Chapter Questions

Problem 7DQ: Can any nonrefundable credits, other than the foreign tax credit, reduce the regular income tax...

See similar textbooks

Related questions

Q: why are the operating taxes in the FCF analysis calculating without taking into account the tax…

A: Interest paid on loans or debts is an expense for the company. Also these interests reduces the…

Q: PROBLEM 23: The records of Santiago were destroyed by fire at the end of the current year. However,…

A: Income Statement:- The income statement is defined as the financial statement that explains revenues…

Q: PLEASE ANSWER ALL QUESTIONS IN BOTH 1 AND 2 PLEASE. 1. Some accountants believe that deferred taxes…

A: Temporary differences are defined as differences between the carrying amount of assets and…

Q: Which of the following is correct

A: All capital gains are not capital assets. Taxpayers not remits tax to government. Exempt from income…

Q: Access the glossary (“Master Glossary”) to answer the following. a. What is a deferred tax asset?…

Q: Non-assessable income does not increase tax liability, but tax-free income increases tax liability-…

A: Non-Assessable Income-: Non-assessable non-exempt revenue is common or statutory revenue that is…

Q: What types of income should not be classified as such on a tax return? Why shouldn't they be…

A: Answer Nontaxable income won’t be taxed, whether or not you enter it on your tax return. nontaxable…

Q: Tax rates other than the current tax rate may be used to calculate the deferred income tax amount on…

A: Taxation is the process by which governments collect money from individuals and businesses to fund…

Q: While earnings on assets held in a Tax Free Savings Account (TFSA) will not be taxed while the…

A: False

Q: What are the advantages of claiming the standard deduction versus itemizing deductions on your…

A: Income tax: It is the tax every individual or company is liable to pay on the income generated…

Q: earnings below a certain threshold are taxed. What is your opinion on the fairness of this tax?

A: social security tax is such type of tax in which a percentage of the gross wages that most of the…

Q: In almost all cases, making contributions to an RRSP will provide the deferral of income tax. In…

A: Introduction: RRSP (Registered Retirement Savings Plan): A (RRSP) is a retirement funds plan where…

Q: discussion on why you think credits are better than deductions, or if deductions are better than…

A: Similarities between Tax Deduction and Tax CreditPurpose: Both tax deduction and tax credit serve to…

Q: Which of the following statements is correct? O a. A tax offset can result in a refund if it relates…

A: The tax means the amount that a taxpayer provides to the government. The government uses this amount…

Q: Discuss in detail the taxation of interest income. Which is subject to final tax? Which is subject…

A: Interest income- Interest income is the sum paid to a body for lending its funds or hire another…

Q: Which of the following is NOT correct

A: Capital related transactions are coming under the tax liability as shor term capital gain/loss or…

Q: Can you explain the difference between a deferred tax asset, a tax receivable, and a prepaid tax…

A: A deferred tax asset is a tax deduction that can be used in the future to reduce taxable income. A…

Q: nonmonetary?

A: Nonmonetary items are the items that are subject to change in value over a period of time. These…

Q: (1)Tax free income & tax credit income are same in income tax computation-Discuss with your own…

A: Hello. Since your question has multiple parts, we will solve the first question for you. If you want…

Q: What is an assessment under the income tax assessment legislation? and why are assessments importa

A: Solution Return under income tax Every person whose income is taxable as per the…

Q: Why is the income tax payable not the same as income tax expense

Q: Which of the following are true about Deferred Tax Liabilities? (check all that apply) In the…

A: Deferred tax liabilities and deferred tax assets arise when there are timing differences between…

Concept explainers

Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.

Question

Definition Definition Estimated future tax made while preparing accounts. Deferred tax is estimated based on past and present transactions from financial statements. It is not the actual tax that needs to be paid or is refundable from the revenue authority; it is an accounting entry. It is necessary to account for deferred tax due to difference between accounting profits and taxable profits.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

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.

Similar questions

Who is responsible for collecting sales and excise taxes? Who actually pays the tax?
Can any nonrefundable credits, other than the foreign tax credit, reduce the regular income tax liability below the amount of the TMT? Explain.
In almost all cases, making contributions to an RRSP will provide the deferral of income tax. In some cases, making such contributions may result in avoidance of tax. Explain these statements.
Which of the following are true about Deferred Tax Liabilities? (check all that apply) In the future, tax rules require bigger expenses than GAAP Initially, tax rules require smaller expenses than GAAP In the future, tax rules require smaller expenses than GAAP They represent an obligation to make higher tax payments in the future Initially, tax rules require bigger expenses than GAAP
Which statement regarding the current Form W-4 is accurate? Answer: A. It uses fewer pieces of information than the previous version to determine federal income tax. B. It can be used with either the wage-bracket or the percentage method of determining federal income tax. C. When determining federal income tax using the wage-bracket method, you can refer to the same tax tables associated with the previous version. D. Unlike the previous version, it calculates the number of withholding allowances.
Discuss in detail the taxation of interest income. Which is subject to final tax? Which is subject to regular income tax?
* 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.
Please answer it if is TRUE or FALSE.
PLEASE ANSWER ALL QUESTIONS IN BOTH 1 AND 2 PLEASE. 1. Some accountants believe that deferred taxes should not be recognized for certain temporary differences. What is the conceptual basis for this argument? 2.What events create permanent differences between accounting income and taxable income? What effect do these events have on the determination of income taxes payable and deferred income taxes? Identify three examples of permanent differences between accounting income and taxable income.
Tax rates other than the current tax rate may be used to calculate the deferred income tax amount on the balance sheet if O it is probable that a future tax rate change will occur. O it appears likely that a future tax rate will be greater than the current tax rate. O the future tax rates have been enacted into law. O it appears likely that a future tax rate will be less than the current tax rate.
Explain what the benifit is to having tax classified under statutory income. Aside from capital gains discounts that are applied, if you receive income that is classified under staturory income, what are the benifits over it being classified as ordinary income. provide an example.
Explain further the steps in determining the income tax.