Question

1.what methods can be used to compute total current year estimated taxes?

2.the tax effects of permanent differences generally are reported in a company computation of its effective tax rate?

True or False

3.) The rules for consolidated reporting for financial statementpurposes are the same as the rules for consolidated reporting for tax purposes

True or False

5) Jed clampett owns 600 shares(60%) of AAA cos common stock AAA only has common stock. The other AAA shareholders are not related to jed. AAA co redeems 125 shares of jets stock for 5 M. tHE TRANSACTION WILL be treated as:

a. Redemption of stock-jee will recognize capital gain based on 5M less his adj basis

b. dividend -the transaction does not qualify for treatment as a redeemption

c.) return capital

Answer 1

Answer 2

1. Methods to Compute Total Current Year Estimated Taxes:

• Tax Estimation Software: Using specialized tax software, individuals or businesses can input their financial information, deductions, and credits to calculate their estimated taxes for the current year.

• Tax Tables: Tax authorities often provide tax tables that can be used to estimate taxes based on taxable income and filing status.

• Marginal Tax Rates: Applying the appropriate marginal tax rates to different income brackets can help estimate total taxes owed.

2. The tax effects of permanent differences generally are reported in a company's computation of its effective tax rate. True. Permanent differences in accounting and tax treatment result in variations between the financial accounting income and taxable income. These differences are included in the calculation of the company's effective tax rate.

3. The rules for consolidated reporting for financial statement purposes are the same as the rules for consolidated reporting for tax purposes. False. The rules for consolidated reporting may differ between financial statement reporting and tax reporting. For financial reporting, companies may use different accounting standards (e.g., IFRS or GAAP), whereas tax reporting follows the tax laws and regulations of the specific jurisdiction.

4. Jed Clampett owns 600 shares (60%) of AAA Co's common stock. The other AAA shareholders are not related to Jed. AAA Co redeems 125 shares of Jed's stock for 5 million. The transaction will be treated as: a. Redemption of stock - Jed will recognize capital gain based on 5 million less his adjusted basis. The redemption of stock is treated as a capital transaction for the shareholder, and any gain or loss is generally treated as a capital gain or loss.

Please note that there is no question number 5 in your provided text. If you have any additional questions or need further clarification, feel free to ask.

Answer 3

1. Methods to compute total current year estimated taxes:

• Tax Software: Using tax preparation software is one of the most common and convenient methods to compute estimated taxes. Many tax software options are available that can calculate your estimated taxes based on your income, deductions, and other relevant factors.

• Tax Worksheets: Some tax authorities provide worksheets or forms to help taxpayers calculate their estimated taxes. These worksheets usually require you to enter your income, deductions, and other tax-related information to compute the estimated tax liability.

• Tax Professionals: Seeking assistance from tax professionals, such as accountants or tax advisors, is another option. They can help you calculate your estimated taxes based on your financial situation and provide personalized advice.

2. The tax effects of permanent differences generally are reported in a company computation of its effective tax rate? True or False: False

• Permanent differences are items that cause a discrepancy between taxable income and accounting income and are expected to exist indefinitely. These differences are reported in the financial statements (accounting income) but are not included in the computation of taxable income for tax purposes. Therefore, they do not affect the effective tax rate since they are not part of the tax calculation.

3. The rules for consolidated reporting for financial statement purposes are the same as the rules for consolidated reporting for tax purposes? True or False: False

• False. The rules for consolidated reporting for financial statement purposes and tax purposes are different. In many jurisdictions, including the United States, companies may be required to prepare consolidated financial statements for reporting to shareholders and investors. Consolidated financial statements combine the financial information of a parent company and its subsidiaries as if they were a single entity.

• However, for tax purposes, the rules for consolidating the financial information of subsidiaries may differ from the rules used for financial reporting. Tax consolidation rules can vary based on the tax jurisdiction and the specific tax laws in place.

5. Jed Clampett owns 600 shares (60%) of AAA Co's common stock. The other AAA shareholders are not related to Jed. AAA Co redeems 125 shares of Jed's stock for $5 million. The transaction will be treated as: Answer: a. Redemption of stock - Jed will recognize a capital gain based on $5 million less his adjusted basis.

• Since the transaction involves the redemption of Jed Clampett's stock by AAA Co, it will be treated as a stock redemption. Jed will recognize a capital gain on the redemption based on the difference between the redemption price ($5 million) and his adjusted basis in the redeemed shares. The gain will be subject to applicable capital gains tax rates. The other options (b. dividend and c. return of capital) are not applicable in this scenario.