Which of the following statements is true?
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Which of the following statements is true?
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All corporations are subject to AMT. |
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Small corporations with average annual gross receipts of less than $10 million are not subject to AMT. |
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The Tax Cuts and Jobs Act of 2017 repealed the corporate alternative minimum tax (AMT) beginning in 2018. |
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The AMT rate is 25% of AMT income after exemption. |
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- A local politician claimed, “to reduce the government’sdeficit, it’s time we require companies to start payingtheir deferred income tax liabilities.” Explain to thepolitician what deferred income taxes represent and whythey should not be viewed as accounts payable to thegovernment.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 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[This problem is a variation of P 20-12, modified to consider income tax effects.] Williams-Santana Inc. is a manufacturer of high-tech industrial parts that was started in 2009 by two talented engineers with little business training. In 2024, the company was acquired by one of its major customers. As part of an internal audit, the following facts were discovered. The audit occurred during 2024 before any adjusting entries or closing entries were prepared. The income tax rate is 25% for all years. a. A five-year casualty insurance policy was purchased at the beginning of 2022 for $35,000. The full amount was debited to insurance expense at the time. b. Effective January 1, 2024, the company changed the salvage values used in calculating depreciation for its office building. The building cost $600,000 on December 29, 2013, and has been depreciated on a straight-line basis assuming a useful life of 40 years and a salvage value of $100,000. Declining real estate values in the area…
- (Deferred Taxes, Income Effects) Stephanie Delaney, CPA, is the newly hired director of corporate taxation for Acme Incorporated, which is a publicly traded corporation. Ms. Delaney’s first job with Acme was the review of the company’s accounting practices on deferred income taxes. In doing her review, she noted differences between tax and book depreciation methods that permitted Acme to realize a sizable deferred tax liability on its balance sheet. As a result, Acme paid very little in incometaxes at that time.Delaney also discovered that Acme has an explicit policy of selling off plant assets before they reversed in the deferred tax liability account. This policy, coupled with the rapid expansion of its plant asset base, allowed Acme to “defer” all income taxes payable for several years, even though it always has reported positive earnings and an increasing EPS. Delaney checked with the legal department and found the policy to be legal, but she’s uncomfortable with the ethics of…Green Corporation is required to change its method of accounting for federal income tax purposes. The change will require an adjustment to income to be made over three tax periods. Joe, the sole shareholder of Green, wants to better understand the implications of this adjustment for E&P purposes, because he anticipates a distribution from Green in the current year. Explain to Joe the impact of the adjustment on E&P.15-6
- Under the new Tax Cut and Jobs Act of 2017 rules for the computation of taxable income did not change. However, computation of tax liability changed and reflects a new 21% Federal flat tax rate for corporations. Bear Corp. has $55,000 of taxable income from its operations, $30,000 of interest income from corporate debt securities, $25,000 in income from tax-exempt municipal debt securities, and $20,000 of dividend income from common stock it holds in other corporations (such dividends are not excludable). Given the new 21% Federal flat tax rate for corporations, what is Bear Corp's tax liability? (Answer in Dollars, cents are not necessary and omit the dollar sign, $.)Hopkins Company has taken a position in its tax return to claim a tax credit of $70,000 (direct reduction in taxes payable) and has determined that it is "more likely than not" that the tax position will be sustained. The tax credit would be a direct reduction in current taxes payable. Hopkins believes the likelihood that a $70,000, $42,000, or $14,000 tax benefit will be sustained is 20%, 40%, and 40%, respectively. What is the amount of the additional projected liability that should be recognized? additional projected liabilityWhich of the following is wrong? If the seller is a non-VAT registered seller, the government shall withhold a 3% final percentage tax on the sale before payment. The final withholding system on the sales to the government and GOCC will no longer be applicable starting 2021. VAT treatment on sales to government is the same as VAT treatment on sale to non-government taxpayer except for the mandatory withholding of 5% by the government agency who avail the goods or services offered by the seller. None of the choices
- Private academic institutions and other special domestic businesses are exempt from the MCIT as long as they pay a preferential payroll tax of 10%. True or False.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.The recent implementation of TCJA Act of 2017 limits the deductions for state and local taxes, which includes property taxes and sales taxes, to a maximum amount of $10,000 each year. Is the IRS taking drastic steps towards curbing home ownership? Does this place a disproportionate burden on taxpayers residing in states with higher market values on residential property?
