Your client, a start-up accrual basis taxpayer, has asked you to prepare its initial tax return. When examining its financial statements and audit work papers, you notice employee benefit accruals such as vacation and sick leave payables within the audit work papers. This means there was an accompanying expense on the income statement. How would you treat these expenses on the tax return? Multiple Choice A) Deduct them in full without any limitation B) Deduct only the amount estimated to be incurred within 8 ½ months after year end. C) Deduct only the amount estimated to be incurred within 12 months after year end. D) None of the above
A. Deduct them in full without any limitation.
Explanation~ Vacation: Full time workers are entitled to a minimum of 4 weeks of paid annual leave for every 12 months of continuous service.
Sick leave: Full time workers are entitled to 10 days of paid sick leave per year.
If you account for your accessible income on an accrual basis, you include all income earned for work irrespective of its payment received during the income year.
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Your client, a start-up accrual basis taxpayer, has asked you to prepare its initial tax return....
please answer 1-3
You are examining the audit work papers of a client, Sunrise Manufacturing. In preparation of their 2019 tax return. The audit work papers provide all the detail for each of the accounts that are provided on the financial statements. For example, all the detail for the accounts receivable account is contained in the audit work papers so that you know exactly what makes up the number for that account. As you are examining the Seling, General and...
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You are part of an accounting firm Advisory team that has been engaged by a client to assess how they might make their “sales to order” process more “efficient”, perhaps with the introduction of new technologies. The client has provided a written description of their business, and the process under review, as follows: HHH is a small manufacturer of university based sportswear (a highly competitive market where fast response times are prized by customers). Sales span every region of the...
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technology in the market. Variable production costs are estimated to be $45,000 per unit for the entire life of the project. ACC00152 Business Financet You are working in the finance department of Space Sky Flight Ltd (SSF). The...
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