Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 6, Problem 38P
Duck, an accrual basis corporation, sponsored a rock concert on December 29, 2019. Gross receipts were $300,000. The following expenses were incurred and paid as indicated:
Because the coliseum was not scheduled to be used again until January 15, the company with which Duck had contracted did not perform the cleanup until January 8–10, 2020.
- a. Calculate Duck’s net income from the concert for tax purposes for 2019.
- b. Using the present value tables in Appendix H, what is the true cost to Duck if it had to defer the $100,000 deduction for the performers until 2020? Assume a 5% discount rate and a 21% marginal tax rate in 2019 and 2020.
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On January 1, 2021, Sheridan, Inc. purchased a machine for $2180000 which will be depreciated $218000 per year for financial statement reporting purposes. For income tax reporting, Sheridan elected to expense $243000 and to use straight-line depreciation which will allow a cost recovery deduction of $193000 for 2021. Assume a present and future enacted income tax rate of 20%. What amount should be added to Sheridan's deferred income tax liability for this temporary difference at December 31, 2021?
Ayres Services acquired an asset for $200 million in 2021. The asset is depreciated for financial reporting purposes
over four years on a straight-line basis (no residual value). For tax purposes the asset's cost is depreciated by MACRS.
The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022,
2023, and 2024 are as follows:
2021
$405 $425
($ in millions)
2022 2023 2024
$440
Pretax accounting income
Depreciation on the income
statement
Depreciation on the tax
return
$475
50
50
50
50
(64)
(84)
(30)
(22)
Taxable income
$391 $391
$460
$503
Required:
For December 31 of each year, determine (a) the cumulative temporary book-tax difference for the depreciable asset
and (b) the balance to be reported in the deferred tax liability account. (Leave no cell blank, enter "O" wherever
applicable. Enter your answers in millions rounded to 2 decimal place (i.e., 5,500,000 should be entered as 5.50).)
Beginning of End of
2021
End of
End of
End…
Ayres Services acquired an asset for $144 million in 2021. The asset is depreciated for financial reporting purposes over four years on a straight-line basis (no residual value). For tax purposes the asset/s cost is depreciated by MACRS. The enacted tax rate is 25%. Amounts for pretax accounting income, depreciation, and taxable income in 2021, 2022, 2023, and 2024 are as follows:
_ ($ in millions) ____________
2021 2022 2023 2024
Pretax accounting income $370 $390 $405 $440
Depreciation on the income statement 36 36 36 36
Depreciation on the tax return (57) (49) (23) (15)
Taxable income…
Chapter 6 Solutions
Individual Income Taxes
Ch. 6 - Prob. 1DQCh. 6 - Prob. 2DQCh. 6 - Classify each of the following expenditures paid...Ch. 6 - Prob. 4DQCh. 6 - Prob. 5DQCh. 6 - Prob. 6DQCh. 6 - Prob. 7DQCh. 6 - Prob. 8DQCh. 6 - Prob. 9DQCh. 6 - Prob. 10DQ
Ch. 6 - Prob. 11DQCh. 6 - Prob. 12DQCh. 6 - Prob. 13DQCh. 6 - Prob. 14DQCh. 6 - Linda operates an illegal gambling operation....Ch. 6 - Prob. 16DQCh. 6 - Melissa, the owner of a sole proprietorship, does...Ch. 6 - Prob. 18DQCh. 6 - Blaze operates a restaurant in Cleveland. He...Ch. 6 - Prob. 20DQCh. 6 - Prob. 21DQCh. 6 - Ray loses his job as a result of a corporate...Ch. 6 - Lavinia incurs various legal fees in obtaining a...Ch. 6 - Prob. 24DQCh. 6 - Prob. 25DQCh. 6 - Shanna, a calendar year and cash basis taxpayer,...Ch. 6 - Prob. 27CECh. 6 - Maud, a calendar year taxpayer, is the owner of a...Ch. 6 - Vella owns and operates an illegal gambling...Ch. 6 - Printer Company pays a 25,000 annual membership...Ch. 6 - Stanford owns and operates two dry cleaning...Ch. 6 - Tobias has a brokerage account and buys on the...Ch. 6 - Prob. 33PCh. 6 - Prob. 34PCh. 6 - Janice, age 32, earns 50,000 working in 2019. She...Ch. 6 - Prob. 36PCh. 6 - Prob. 37PCh. 6 - Duck, an accrual basis corporation, sponsored a...Ch. 6 - Prob. 39PCh. 6 - Prob. 40PCh. 6 - Prob. 41PCh. 6 - Prob. 42PCh. 6 - Terry traveled to a neighboring state to...Ch. 6 - Prob. 44PCh. 6 - Prob. 45PCh. 6 - Prob. 46PCh. 6 - Prob. 47PCh. 6 - Prob. 48PCh. 6 - Prob. 49PCh. 6 - Prob. 50PCh. 6 - Prob. 51PCh. 6 - Brittany Callihan sold stock (basis of 184,000) to...Ch. 6 - Prob. 53PCh. 6 - Prob. 54PCh. 6 - Prob. 55PCh. 6 - Prob. 56PCh. 6 - Prob. 57CPCh. 6 - Prob. 58CPCh. 6 - Prob. 1RPCh. 6 - Prob. 2RPCh. 6 - Prob. 3RPCh. 6 - Which of the following is a deduction for AGI? a....Ch. 6 - Which of the following is not a deduction for AGI?...Ch. 6 - David is a CPA and enjoys playing the lottery....Ch. 6 - Prob. 4CPACh. 6 - Prob. 5CPACh. 6 - Prob. 6CPA
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