The records for Tiger Corp. show these data for 2026: Financial income before tax is...
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The records for Tiger Corp. show these data for 2026: • Financial income before tax is $945,000. • Tax-exempt interest of $12,000 was received from a municipal bond investment. Life insurance premiums of $16,000 were paid on key officers of the company. 。 . Tiger received $600,000 in cash on July 1 for renting its excess office space for a period of one year, starting July 1, 2026. Rental income was taxed in the year the cash was received. ● Machinery was acquired in January for $400,000. Straight-line depreciation over a five year life (no residual value) is used for book purposes. For IRS purposes, MACRS depreciation is used during 2026, and Tiger may deduct 35% for 2026. • Tiger received $100,000 in dividends from other corporations, only 20% of the dividends are subject to taxation... Required: 1. With financial income before taxes as a starting point, compute taxable income. Determine if cach book/tax difference temporary or permanent. 2. Prepare the journal entry to record income taxes for 2026, the tax rate is 35%. Pretax Financial Income. Less tax exempt interest - Perm. Difference. Add Non exempt Insurance Premiums- Perm. Difference - Temp. Difference for Rental Income........... Temp. Difference for Depreciation Less Dividends deduction -Perm. Difference.... TAXABLE INCOME. ................ $945,000 <$12,000> $16,000 $300,000 <$60,000> $80,000 $1,109,000 The records for Tiger Corp. show these data for 2026: • Financial income before tax is $945,000. • Tax-exempt interest of $12,000 was received from a municipal bond investment. Life insurance premiums of $16,000 were paid on key officers of the company. 。 . Tiger received $600,000 in cash on July 1 for renting its excess office space for a period of one year, starting July 1, 2026. Rental income was taxed in the year the cash was received. ● Machinery was acquired in January for $400,000. Straight-line depreciation over a five year life (no residual value) is used for book purposes. For IRS purposes, MACRS depreciation is used during 2026, and Tiger may deduct 35% for 2026. • Tiger received $100,000 in dividends from other corporations, only 20% of the dividends are subject to taxation... Required: 1. With financial income before taxes as a starting point, compute taxable income. Determine if cach book/tax difference temporary or permanent. 2. Prepare the journal entry to record income taxes for 2026, the tax rate is 35%. Pretax Financial Income. Less tax exempt interest - Perm. Difference. Add Non exempt Insurance Premiums- Perm. Difference - Temp. Difference for Rental Income........... Temp. Difference for Depreciation Less Dividends deduction -Perm. Difference.... TAXABLE INCOME. ................ $945,000 <$12,000> $16,000 $300,000 <$60,000> $80,000 $1,109,000
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To compute the taxable income and determine the temporary or permanent nature of the booktax differences lets go through each item 1 Taxexempt interes... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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