Question

Week 5 Assignment saved Problem 6-67 (LO 6-4) Cadillac Square Corporation determined that $1,000,000 of its research tax credit on its current-year tax return was uncertain Management made the following assessment of the company's potential tax benefit from the deduction and its probability of Occurring points Cumulative Probability of Occurring (%) Potential Estated Individual Probability Benefit (ees) of Occurring (5) Sle, Bee $ 750.ee 5 See, Bee 15 Management determined that there was only a 50/50 chance any portion of the $1,000,000 research tax credit would be sustained on audite $340,000 $272,000 $170,000

Answer 1

Pgo Answort Gust) calculate Tax benefit amount recogniäed : potential Estimated benefit $ 750,000 that has a Cumulative probability of occuring more than 50%. Cs Compráticon would record an increase in income tax payable ie, $250,000 $1,000,000 - $750,000 $250,000 The difference between full benefit received on the tax refeer cond Expeeted benefit to be received after audit by the Irs (internal service revenue). .The Tax benefit amount recognised = $750,000