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Yellow Corporation, a calendar-year taxpayer, made estimated tax payments of $40,000 for 2020 ($10,000 per quarter). Yellow filed its Federal income tax return for 2020 reflecting a tax liability of $15,000. Due to its overpayments, Yellow received a $25,000 refund in 2021. What is the impact on Yellow Corporation's E & P of the payment of estimated taxes and the receipt of the Federal income tax refund?

Yellow Corporation, a calendar-year taxpayer, made estimated tax payments of $40,000 for 2020 ($10,000 per quarter). Yellow filed its Federal income tax return for 2020 reflecting a tax liability of $15,000. Due to its overpayments, Yellow received a $25,000 refund in 2021. What is the impact on Yellow Corporation's E & P of the payment of estimated taxes and the receipt of the Federal income tax refund?

FINANCIAL ACCOUNTING
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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Problem 5-29 (LO. 2) Yellow Corporation, a calendar-year taxpayer, made estimated tax payments of $40,000 for 2020 ($10,000 per quarter). Yellow filed its Federal income tax return for 2020 reflecting a tax liability of $15,000. Due to its overpayments, Yellow received a $25,000 refund in 2021. What is the impact on Yellow Corporation's E & P of the payment of estimated taxes and the receipt of the Federal income tax refund? To compute Yellow's E & P for 2020, the $40,000 for Federal income taxes paid would be E & P for 2021, Yellow Corporation would taxable income. To compute $25,000 to taxable income to reflect the Federal income tax refund.
Transcribed Image Text:Problem 5-29 (LO. 2) Yellow Corporation, a calendar-year taxpayer, made estimated tax payments of $40,000 for 2020 ($10,000 per quarter). Yellow filed its Federal income tax return for 2020 reflecting a tax liability of $15,000. Due to its overpayments, Yellow received a $25,000 refund in 2021. What is the impact on Yellow Corporation's E & P of the payment of estimated taxes and the receipt of the Federal income tax refund? To compute Yellow's E & P for 2020, the $40,000 for Federal income taxes paid would be E & P for 2021, Yellow Corporation would taxable income. To compute $25,000 to taxable income to reflect the Federal income tax refund.
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