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Facegram, Inc., reported net cumulative favorable book-tax temporary differences of $1,000,000 at the end of 2021. During 2022, legislation was

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Facegram, Inc., reported net cumulative favorable book-tax temporary differences of $1,000,000 at the end of 2021. During 2022, legislation was enacted that will increase Facegram’s tax rate from 21% to 25% beginning in 2023. Facegram expects to report $500,000 of 2022 pre-tax book and taxable income with no change to its net cumulative book-tax temporary differences.

a. What will Facegram report as its deferred tax benefit or expense for 2022? 

b. What, if any, effect will the above information have on Facegram’s 2022 tax rate reconciliation? 

c. (How) would the answers to parts (a) and (b) change if Facegram’s $1,000,000 net cumulative book-tax temporary difference at the end of 2021 had been unfavorable rather than favorable?  

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a As a result of the rate increase from 21 to 25 Facegrams net deferred tax liability will increase …View the full answer


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South Western Federal Taxation 2023 Essentials Of Taxation Individuals And Business Entities

South Western Federal Taxation 2023 Essentials Of Taxation Individuals And Business Entities

ISBN: 9780357720103

26th Edition

Authors: Annette Nellen, Andrew D. Cuccia, Mark Persellin, James C. Young

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Question Details
Chapter # 3- Taxes in the Financial Statements..
Section: Problem
Problem: 22
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Question Posted: September 28, 2023 05:08:02
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