Corporation, a cash basis taxpayer, received $10,000 from a customer in 2019. In that year, the customer filed a claim for a refund of the fee. In 2020, Yard refunded the customer $6,000. In 2019, Yard paid $5,000 in estimated state income tax. In May 2020, Yard received a state income tax refund of $2,000 for overpayment of its 2019 income tax. Yard was in the 35% marginal tax bracket in 2019 and in the 15% marginal tax bracket in 2020. What are the tax effects of the 2020 payment to the customer and the collection of the state income taxes overpaid?
Corporation, a cash basis taxpayer, received $10,000 from a customer in 2019. In that year, the customer filed a claim for a refund of the fee. In 2020, Yard refunded the customer $6,000. In 2019, Yard paid $5,000 in estimated state income tax. In May 2020, Yard received a state income tax refund of $2,000 for overpayment of its 2019 income tax. Yard was in the 35% marginal tax bracket in 2019 and in the 15% marginal tax bracket in 2020. What are the tax effects of the 2020 payment to the customer and the collection of the state income taxes overpaid?
Chapter18: Accounting Periods And Methods
Section: Chapter Questions
Problem 9DQ
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Yard Corporation, a cash basis taxpayer, received $10,000 from a customer in 2019. In that year, the customer filed a claim for a refund of the fee. In 2020, Yard refunded the customer $6,000. In 2019, Yard paid $5,000 in estimated state income tax. In May 2020, Yard received a state income tax refund of $2,000 for overpayment of its 2019 income tax. Yard was in the 35% marginal tax bracket in 2019 and in the 15% marginal tax bracket in 2020. What are the tax effects of the 2020 payment to the customer and the collection of the state income taxes overpaid?
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ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT