The Tax Cut and Jobs Act of 2017 reduced the US corporate tax rate from a maximum 35% to a flat rate of 21%. As a result, companies were required to "revalue" their deferred tax assets and liabilities to reflect the new tax rates. In general, a firm with a substantial pool of US Federal NOL Carryforwards reported in the deferred tax asset section (the DTA for NOLS) experienced a: O No impact on deferred tax assets or liabilities because the cash tax value of an NOL carryforward does not depend on the statutory tax rate O Reduction in the book value of the DTA for NOLS with the offset an increase in tax expense O Increase in market value reflecting the reduced value of the NOL tax shields Increase the book value of the DTA for NOLS with the offset a decrease in tax expense

The Tax Cut and Jobs Act of 2017 reduced the US corporate tax rate from a maximum 35% to a flat rate of 21%. As a result, companies were required to "revalue" their deferred tax assets and liabilities to reflect the new tax rates. In general, a firm with a substantial pool of US Federal NOL Carryforwards reported in the deferred tax asset section (the DTA for NOLS) experienced a: O No impact on deferred tax assets or liabilities because the cash tax value of an NOL carryforward does not depend on the statutory tax rate O Reduction in the book value of the DTA for NOLS with the offset an increase in tax expense O Increase in market value reflecting the reduced value of the NOL tax shields Increase the book value of the DTA for NOLS with the offset a decrease in tax expense

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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Which of the following statements about the calculation of corporate alternative minimum tax (AMT) is true? a. Corporate AMT has been repealed under the Tax Cuts and Jobs Act of 2017. b. The AMT net operating loss can reduce AMTI to zero. c. The AMTI exemption for all corporations is $40,000. d. The minimum tax credit can be carried back two years.
Zinc, Inc., reports an effective tax rate in its income tax footnote of 14%. The only reconciling item with regard to the hypothetical tax at 35% is a valuation allowance reversal of negative 21%. Which of the following statements comparing Zinc, Inc.'s effective tax rate with its competitors, all of whom have an effective tax rate between 32% and 36%, is true? O a. Zinc, Inc.'s structural effective tax rate is actually quite close to its competitors. O b. Zinc, Inc., is likely to be engaged in tax shelter activities. O c. Zinc, Inc., earned more cash profits because of its lower effective tax rate. O d. Zinc, Inc., is managing its tax burden in a more efficient manner than its competitors. O e. Zinc, Inc., is likely facing bankruptcy.
24. Horner Corporation has a deferred tax asset at December 31, 2015 of $80,000 due to the recognition of potential tax benefits of an operating loss carryforward. The enacted tax rates are as follows: 40% for 2012-2014; 35% for 2015; and 30% for 2016 and thereafter. Assuming that management expects that only 60% of the related benefits will actually be realized, a valuation account should be established in the amount of: a. $80,000 b. $32,000 c. $28,000 d. $24,000
15-A Company has earned an income of RO 120,000 in the tax year 2019. In the year 2017 and 2018 company has incurred the loss of RO 15,000 and RO 25,000 which is so far not claimed for set-off from the succeeding year's incomes. It is assumed that it has registered capital more than RO 50,000. Which one of the following is the tax liability for the year 2019 as per Oman tax laws? O a. None of the options O b. RO 12,000 O c. RO 40,000 O d. RO 15,000
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In 2023, Mini reports $800,000 of pretax book net income. Mini did not recognize any bad debt expense for book purposes in 2023 but did deduct $15,000 in bad debt expense for tax purposes. Mini reports no other temporary or permanent book - tax differences. The applicable U.S. Federal corporate income tax rate is 21%, and Mini earns an after - tax rate of return on capital of 4%. For 2023, compute Mini's current income tax benefit or expense.
Assume a firm has a net operating loss of $100. The statutory tax rate is 20%. Which of the below is correct? Select One: a.The firm will recognize a deferred tax liability of $20. b.The firm not recognize any deferred tax asset or deferred tax liability. c.The firm will recognize a deferred tax asset of $20. d.The firm will recognize a deferred tax liability of $80.
4 When should a company create a valuation allowance for a deferred tax asset? O When taxable income is greater than reported income O When there is less than a 50% probability that a company will fail to realize a portion of the asset O When there is more than a 50% probability that a company will fail to realize a portion of the asset O When reported income is greater than taxable income W
Tax avoidance vs. tax evasion = Over time, these concepts have become somewhat blurred. Define tax avoidance Define tax evasion Companies like Apple, Starbucks, etc. have enlisted the aid of CPA and law firms to assist them in minimizing their worldwide taxes. Afterwards, it was discovered that such companies had an effective tax rate of 5 - 10% for US tax, well below the 21% tax rate. There are numerous articles detailing what these companies did to achieve such low tax rates. Summarize what one of these companies did to achieve such a low effective federal tax rate. Were such actions legal? If so, why did the Organization for Economic Cooperation and Development (OECD) and various countries propose new tax rules? Please respond to all questions above.
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