This year, Mrs. Bard, who is head of Lyton Industries's accounting and tax department, received a...
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This year, Mrs. Bard, who is head of Lyton Industries's accounting and tax department, received a compensation package of $360,000. The package consisted of a $300,000 current salary and $60,000 deferred compensation. Lyton will pay the deferred compensation in three annual $20,000 installments beginning with the year in which Mrs. Bard retires. Lyton accrued a $60,000 unfunded liability for the deferred compensation on its current year financial statements. Assume Mrs. Bard retires in 2024 and receives her first $20,000 payment from Lyton Industries. Required: a. How much compensation income does Mrs. Bard recognize in 2024? b. What is Lyton Industries's 2024 tax deduction for the payment to Mrs. Bard? c. What is the effect of the payment on Lyton Industries's 2024 book income and deferred tax asset or liability? Assume a 21 percent tax rate. This year, Mrs. Bard, who is head of Lyton Industries's accounting and tax department, received a compensation package of $360,000. The package consisted of a $300,000 current salary and $60,000 deferred compensation. Lyton will pay the deferred compensation in three annual $20,000 installments beginning with the year in which Mrs. Bard retires. Lyton accrued a $60,000 unfunded liability for the deferred compensation on its current year financial statements. Assume Mrs. Bard retires in 2024 and receives her first $20,000 payment from Lyton Industries. Required: a. How much compensation income does Mrs. Bard recognize in 2024? b. What is Lyton Industries's 2024 tax deduction for the payment to Mrs. Bard? c. What is the effect of the payment on Lyton Industries's 2024 book income and deferred tax asset or liability? Assume a 21 percent tax rate.
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Answer rating: 100% (QA)
Answer to Part a Let us assume it is a nonqualified deferred compensationDeferred compensation are a... View the full answer
Related Book For
Principles of Taxation for Business and Investment Planning 2019 Edition
ISBN: 9781260161472
22nd edition
Authors: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
Posted Date:
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