Li'l Lisa owns 30% of the outstanding common voting stock of Burns Slant-Drilling Co., Inc., EIN 01-7654321 (BSD). BSD reported $1,000,000 of income for the year. Li'l Lisa accounts for its investment in BSD under the equity method for GAAP purposes and recorded its share of BSD's earnings for the year. During the year, BSD distributed a $200,000 dividend to Li'l Lisa. BSD is in the business of drilling for oil, mostly under public schools. BSD is incorporated in Delaware, and only operates in the U.S. Li'l Lisa owns no other major investments in other corporations or partnerships and has no foreign holdings. What is book and tax adjustment? Is the difference permanent or temporary?

Answer rating: 100% (QA)

Lil Lisas Investment in Burns SlantDrilling Co BSD Book vs Tax Treatment Lil Lisa accounts for its i... View the full answer