Question

1. How does financial accounting differ from tax accounting? 2. Jason is single and uses the calendar year for his tax year. He died on May 15, 2019. When is his final income tax return due! 3. If a taxpayer is on the fiscal year, what is the requirement regarding the taxpayer's books? 13. In which of the following cases must the taxpayer annualize its income for a period of less than 12 months? a. Alpha Corporation was formed on August 17 and decided to report on the calendar year. b. Beta Corporation was formed on March 8 and decided to use the fiscal year ending July 31. c. Gamma Corporation has been using a fiscal year ending April 30 and changed to a calendar year. d. Zeta Corporation, a calendar-year corporation, was liquidated on September 23. 4. Pam recently married Henry. When she was single she used a calendar tax year. For a variety of reasons she is considering changing her tax year. When would she not need IRS permission to change her tax year? 5. Can a sole proprietor use a fiscal tax year for a business if the individual is on a calendar tax year? 14. What is the definition of "method of accounting"? 6. What tax year options are available to a partnership? 15. Code Sec. 446 requires the taxpayer's method of accounting clearly reflects income. What does "clearly reflects income mean? 7. Small Company wants to elect a tax year that follows its business cycle, which ends July 20. Is it permitted to do this? 16. Name the two most commonly used overall methods of accounting. 8. If a corporation begins business on June 12, 2019, when may it close its first tax year? 17. Thomas is a sole proprietor who uses the cash method of accounting. As such, the constructive receipt rule applies to him. What is the purpose of the constructive receipt rule? 9. What tax year options are available to an S corporation? 10. Must an estate use the calendar year only for its tax year? 18. When considering the cash versus the accrual method of accounting: a. Is there any type of business that must be on the cash method? b. Is there any type of business that must be on the accrual method? c. What kind of business has a choice? 11. What is the latest time that an application for a change in accounting period may be filed? 12. Big Co. changed its tax year at midyear. It must annualize its short year to determine its tax liability. What does annualizing a short year mean? 19. A cash-basis taxpayer generally is allowed a deduction upon payment of business expenses. May it deduct all payments when paid? 20. May the same taxpayer use several different methods of recognizing income simultaneously?

Answer 1

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Financial accounting Uls_Tax accounting Financial accounting is generally made in accrual basis. The accounting is made on earned ose incared basis rather than receipt or paid basis Tax accounting is normally in casb. based accouhting, which is based on actual cash receipts & payments. The sales or purchase transactions are recorded when cash. beceived os paid. There will be substantial differences in net profits for the period due to differences in accounting. These methods will create differences in tax impact, the differences created ase considered as "deffered assets or deffered tax liability":