ABC had taken a research credit of $600,000 on its 2020 tax return. ABC determined that it was more likely than not that the tax position would be sustained on audit and litigation. Management calculated the probability of receiving a full or partial benefit after resolution and based on their analysis, determined that $250,000 represented the largest amount that has a greater than 50% cumulative probability of being realized on the ultimate settlement of the tax position.

Using the three-column template, prepare the journal entries to record:

• The research tax credit claimed on the tax return.

• The portion of the tax benefit that cannot be recognized

Answer rating: 100% (QA)

1 Entry while taking tax research cred... View the full answer