Early this year, ZeZe Inc. paid a $52,000 legal fee in connection with a dispute over ZeZe’s title to investment land. ZeZe’s auditors required the corporation to expense the payment on this year’s financial statements. According to ZeZe’s tax adviser, the payment is a nondeductible capital expenditure. ZeZe’s tax rate is 21 percent. a. Compute the deferred tax asset or

Chapter 7, Application Problems #5

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Early this year, ZeZe Inc. paid a $52,000 legal fee in connection with a dispute over ZeZe’s title to investment land. ZeZe’s auditors required the corporation to expense the payment on this year’s financial statements. According to ZeZe’s tax adviser, the payment is a nondeductible capital expenditure. ZeZe’s tax rate is 21 percent.

a. Compute the deferred tax asset or a deferred tax liability (identify which) resulting from this difference in accounting treatment.

b. When will the temporary difference reverse?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Related Book For answer-question

Principles Of Taxation For Business And Investment Planning 2019 Edition

22nd Edition

Authors: Sally Jones, Shelley C. Rhoades Catanach, Sandra R Callaghan

ISBN: 9781260161472