What are the amounts of the unrecognized tax benefits? h) What are the penalties and interest resulting from these UTBs at 12/31/YrX1? i) What are the journal entries to book the effects of the unrecognized tax benefits? j) What is the total provision for income tax on a MLTN basis?

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 14P
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Based on a more likely than not (MLTN) basis:

 

    • Co. should only have claimed federal R&D credit of $8,000
    • Co. identified a bonus accrual at the end of YrX1 of $20,000 that should not have been deducted for tax purposes. This bonus accrual was new this year.
    • For federal and state purposes, each jurisdiction assesses a 10% penalty on underpayment of taxes, and simple interest of 5% per year.

 

g) What are the amounts of the unrecognized tax benefits?

h) What are the penalties and interest resulting from these UTBs at 12/31/YrX1?

i) What are the journal entries to book the effects of the unrecognized tax benefits?

j) What is the total provision for income tax on a MLTN basis? 

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