Concept explainers
LO.2 Osprey Corporation, an accrual basis taxpayer, had taxable income for 2019 and paid $40,000 on its estimated state income tax for the year. During 2019, the company received a $4,000 refund upon filing its 2018 state income tax return. The company filed its 2019 state income tax return in August 2020 and paid the $7,000 state income tax due for 2019. In December 2019, the company received a notice from the state tax commission that an additional $6,000 of income tax was due for 2017 because of an error on the return. The company acknowledged the error in December 2019 and paid the additional $6,000 in tax in February 2020. What is Osprey’s 2019 Federal income tax deduction for state income taxes?
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Chapter 18 Solutions
Individual Income Taxes
- How do the all events and economic performance requirements apply to the following transactions by an accrual basis taxpayer? a. The company guarantees its products for six months. At the end of 2019, customers had made valid claims for 600,000 that were not paid until 2020. Also, the company estimates that another 400,000 in claims from 2019 sales will be filed and paid in 2020. b. The accrual basis taxpayer reported 200,000 in corporate taxable income for 2019. The state income tax rate was 6%. The corporation paid 7,000 in estimated state income taxes in 2019 and paid 2,000 on 2018 state income taxes when it filed its 2018 state income tax return in March 2019. The company filed its 2019 state income tax return in March 2020 and paid the remaining 5,000 of its 2019 state income tax liability. c. An employee was involved in an accident while making a sales call. The company paid the injured victim 15,000 in 2019 and agreed to pay the victim 15,000 a year for the next nine years.arrow_forwardB Corporation, a calendar year-end, accrual basis taxpayer, is owned 75 percent by Bonnie, a cash basis taxpayer. On December 31,2019, the corporation accrues interest of $4,000 on a loan from Bonnie and also accrues a $15,000 bonus to Bonnie. The bonus is paid to Bonnie on February 1,2020; the interest is not paid until 2021 . How much can B Corporation deduct on its 2019 tax return for these two expenses? $0 $4,000 $15,000 $19,000 $12,000arrow_forwardQuince Corporation has taxable income of $485,000 for its calendar tax year. Calculate the corporation's income tax liability for 2019 before tax credits. $________________arrow_forward
- Bigham Corporation, an accrual basis calendar year taxpayer, sells its services under 12-month and 24-month contracts. The corporation provides services to each customer every month. On July 1, 2019, Bigham sold the following customer contracts: Determine the income to be recognized in taxable income in 2019 and 2020.arrow_forwardTayla Corporation generated $400,000 of taxable income in the 2019. What is Tayla's corporate tax liability? $71,400 $84,000 $115,600 $0 None of the abovearrow_forward
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT