As ITA 3(b) indicates Taxable Capital Gains exceed Allowable Capital Losses, which of the following statements is correct in the calculation of Net Income for tax purposes in a year? The net amount reported under 3(b) cannot be a negative amount The net amount reported under 3(b) cannot be a positive amount The net amount reported under 3(b) cannot be zero The net amount reported under 3(b) does not apply in the computation of net income for a year

As ITA 3(b) indicates Taxable Capital Gains exceed Allowable Capital Losses, which of the following statements is correct in the calculation of Net Income for tax purposes in a year? The net amount reported under 3(b) cannot be a negative amount The net amount reported under 3(b) cannot be a positive amount The net amount reported under 3(b) cannot be zero The net amount reported under 3(b) does not apply in the computation of net income for a year

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter3: Taxes On The Financial Statements

Section: Chapter Questions

Problem 46P

See similar textbooks

Similar questions

Definitions The FASB has defined several terms in regard to accounting for income taxes. Below are various code letters (for terms) followed by definitions. 1. The deferred tax consequences of future deductible amounts and operating loss carryforwards 2. A difference between the tax basis of an asset or liability and its reported amount in the financial statements that will result in taxable or deductible amounts in future years when the reported amount of the asset or liability is recovered or settled, respectively 3. Temporary difference that results in taxable amounts in future years when the related asset or liability is recovered or settled, respectively 4. The future effects on income taxes, as measured by the applicable enacted tax rate and provisions of the enacted tax low, resulting from temporary differences and operating loss carryforwards at the end of the current year 5. The change during the year in a corporations deferred tax liabilities and assets 6. The deferred tax consequences of future taxable amounts 7. The portion of o deferred tax asset for which it is more likely than not that a tax benefit will not be realized 8. Temporary difference that results in deductible amounts in future years when the related asset or liability is recovered or settled, respectively 9. The sum of income tax payable and deferred tax expense (or benefit) 10. The amount of income taxes paid or payable (or refundable) for the current year 11. An excess of tax deductible expenses over taxable revenues in a year that may be carried forward to reduce taxable income in a future year 12. The excess of taxable revenues over tax deductible expenses and exemptions for the year 13. Income tax expense divided by income before income taxes
Which of the following is not a cause of a difference between pretax financial income and taxable income in a given period? a. operating loss carryforwards b. permanent differences c. applicable tax rates d. temporary differences
Which of the following is deducted from the financial income in computing for the taxable income? Excess of accounting depreciation from the allowed tax deduction Donations received during the year Penalties paid for late filing of tax returns Unrealized losses from FA@FVTOCI
1. A temporary difference arises when an element of income is reported for tax purposes in the period: a. After it is reported in financial income and before it is reported in financial income. b. After that is reported in financial income. c. Before it is reported in financial income. d. It will have no effect on the taxable amounts.
1continue.. Listed below are items that are commonly accounted for differently for financial reporting purposes than they are for tax purposes.For each item below, indicate whether it involves: 1. A temporary difference that will result in future deductible amounts and, therefore, will usually give rise to a deferred income tax asset. 2. A temporary difference that will result in future taxable amounts and, therefore, will usually give rise to a deferred income tax liability. 3. A permanent difference. (e) Installment sales of investments are accounted for by the accrual method for financial reporting purposes and the installment method for tax purposes. (f) For some assets, straight-line depreciation is used for both financial reporting purposes and tax purposes, but the assets’ lives are shorter for tax purposes. (g)…
1 contiune Listed below are items that are commonly accounted for differently for financial reporting purposes than they are for tax purposes.For each item below, indicate whether it involves: 1. A temporary difference that will result in future deductible amounts and, therefore, will usually give rise to a deferred income tax asset. 2. A temporary difference that will result in future taxable amounts and, therefore, will usually give rise to a deferred income tax liability. 3. A permanent difference. (e) Installment sales of investments are accounted for by the accrual method for financial reporting purposes and the installment method for tax purposes.(f) For some assets, straight-line depreciation is used for both financial reporting purposes and tax purposes, but the assets’ lives are shorter for tax purposes.(g)…
1. cont... Listed below are items that are commonly accounted for differently for financial reporting purposes than they are for tax purposes.For each item below, indicate whether it involves: 1. A temporary difference that will result in future deductible amounts and, therefore, will usually give rise to a deferred income tax asset. 2. A temporary difference that will result in future taxable amounts and, therefore, will usually give rise to a deferred income tax liability. 3. A permanent difference. (e) Installment sales of investments are accounted for by the accrual method for financial reporting purposes and the installment method for tax purposes. (f) For some assets, straight-line depreciation is used for both financial reporting purposes and tax purposes, but the assets’ lives are shorter for tax purposes. (g)…
In relation to accounting for income taxes, which one of the following statements is correct? a. Tax expense is the sum of current tax expense plus deferred tax expense. b. All movements in deferred tax assets and liabilities are recognised in the statement of profit or loss and other comprehensive income. c. Current tax expense is the sum of tax expense plus deferred tax expense. d. Deferred tax liabilities are determined from deductible temporary differences.
Listed below are items that are commonly accounted for differently for financial reporting purposes than they are for tax purposes. For each item below, indicate whether it involves: 1. 2. 3. Use the appropriate number to indicate your answer for each. a. b. C. d. e. f. g. h. i. j. A temporary difference that will result in future deductible amounts and, therefore, will usually give rise to a deferred income tax asset. A temporary difference that will result in future taxable amounts and, therefore, will usually give rise to a deferred income tax liability. A permanent difference. k. The MACRS depreciation system is used for tax purposes, and the straight-line depreciation method is used for financial reporting purposes for some plant assets. A landlord collects some rents in advance. Rents received are taxable in the period when they are received. Expenses are incurred in obtaining tax-exempt income. Costs of guarantees and warranties are estimated and accrued for financial reporting…
! a. Required information [The following information applies to the questions displayed below.] What book-tax differences in year 1 and year 2 associated with its capital gains and losses would ABD Incorporated report in the following alternative scenarios? Identify each book-tax difference as favorable or unfavorable and as permanent or temporary. (Leave no answer blank. Enter zero if applicable and select "Not applicable" if no effect.) Capital gains Capital losses Year 1 Year 2 Book-tax Difference Year 1 $ 20,000 8,000 Year 2 $ 5,000 0 Favorable or Unfavorable Temporary or Permanent
Which of the following is an example of a temporary difference which would result in a deferred tax asset? a. Rent revenue collected in advance included in taxable income before it is included in accounting income b. Investment gains recognized earlier for accounting purposes than for tax purposes c. Use of straight-line method for accounting purposes and an accelerated rate for tax purposes d. Use of a longer depreciation period for accounting purposes than is used for tax purpose
A net operating loss occurs when tax-deductible expenses exceed taxable revenues. Tax laws permit the net operating loss to be used to reduce taxable income in other, profitable years by either a carryback of the loss to prior years or a carryforward of the loss to later years. How are loss carrybacks and loss carryforwards recognized for financial reporting purposes?