Part 1
False
All corporate deductions are not deductions from AGI because deductions for or from AGI depends on the nature and type of expenditures expensed in a trade or business.
Part 2
Book-tax difference |
Favourable or unfavourable |
Temporary or permanent |
|
Year 1 |
$(10000) |
Unfavourable |
Temporary |
Year 2 |
0 |
Not applicable |
Not applicable |
Gain recognized on the equipment disposition in year 1= $20000
Gain ordinary due to depreciation recapture = $15000
§1231 gain = 20000-15000 = 5000
Unfavorable temporary book-tax difference = capital loss from land - §1231 gain (treated as a long-term capital gain) = 15000-5000 = $10000
Part 3
False
When taxable income is higher than book income, it is considered as an unfavorable book-tax difference
TF Qu. 01 All corporate deductions... All corporate deductions are deductions from AGI. True or False...
TF Qu. 01 All corporate deductions... 18 All corporate deductions are deductions from AGI. points True or False Print True False
Problem 5-39 (LO 5-2) [The following information applies to the questions displayed below.] What book-tax differences in year 1 and year 2 associated with its capital gains and losses would DEF Inc. report in the following alternative scenarios? Identify each book-tax difference as favorable or unfavorable and as permanent or temporary Problem 5-39 Part a a. In year 1, DEF recognized a loss of $15,000 on land that it had held for investment. In year 1, it also recognized a...
Required information Problem 5-39 (LO 5-2) [The following information applies to the questions displayed below.] Part 2 of 2 What book-tax differences in year 1 and year 2 associated with its capital gains and losses would DEF Inc. report in the following alternative scenarios? Identify each book-tax difference as favorable or unfavorable and as permanent or temporary points Problem 5-39 Part b Print b. In year 1, DEF recognized a loss of $15,000 on land that it had held for...
Required information Problem 5-39 (LO 5-2) [The following information applies to the questions displayed below.) Part 1 of 2 What book-tax differences in year 1 and year 2 associated with its capital gains and losses would DEF Inc. report in the following alternative scenarios? Identify each book-tax difference as favorable or unfavorable and as permanent or temporary. points Problem 5-39 Part a Print a. In year 1, DEF recognized a loss of $15,000 on land that it had held for...
TF Qu. 02 A current year temporary book-tax difference... 19 A current year temporary book-tax difference is unfavorable if it causes taxable income to decrease relative to book income. points True or False Print True False
Problem 5-35 (LO 5-2) On July 1 of year 1, Riverside Corp. (RC), a calendar-year taxpayer, acquired the assets of another business in a taxable acquisition. When the purchase price was allocated to the assets purchased, RC determined it had purchased $1,200,000 of goodwill for both book and tax purposes. At the end of year 1, RC determined that the goodwill had not been impaired during the year. In year 2, however, RC concluded that $200,000 of the goodwill had...
Problem 5-36 (LO 5-2) Assume that on January 1 year 1, ABC Inc. issued 5,000 stock options with an estimated value of $10 per option. Each option entities the owner to purchase one share of ABC stock for $25 a share the per share price of ABC stock on January 1 year 1 when the options were granted). The options vest at the end of the day on December 31, year 2. All 5,000 stock options were exercised in year...
TB MC Qu. 17-58 Lynch Company had a net deferred tax asset of... Lynch Company had a net deferred tax asset of $68,136 at the beginning of the year, representing a net taxable temporary difference of $200,400 (taxed at 34 percent). During the year, Lynch reported pretax book income of $801,600. Included in the computation were favorable temporary differences of $20,400 and unfavorable temporary differences of $50,200. At the beginning of the year, Congress reduced the corporate tax rate to...
Assume that on January 1, year 1, ABC Inc. issued 8,800 stock options with an estimated value of $15 per option. Each option entitles the owner to purchase one share of ABC stock for $27 a share (the per share price of ABC stock on January 1, year 1, when the options were granted). The options vest at the end of the day on December 31, year 2. All 8,800 stock options were exercised in year 3 when the ABC...
Assume that on January 1, year 1, ABC Inc. Issued 7,550 stock options with an estimated value of $12 per option. Each option entitles the owner to purchase one share of ABC stock for $33 a share (the per share price of ABC stock on January 1, year 1, when the options were granted). The options vest at the end of the day on December 31, year 2. All 7,550 stock options were exercised In year 3 when the ABC...