On September 30, Silver Corporation, a calendar year taxpayer, sold a parcel of land (basis of $400,000) for a $1,000,000 note. The note is payable in five installments, with the first payment due next year. Because Silver did not elect out of the installment method, none of the $600,000 gain is taxed this year. Silver Corporation had a $300,000 deficit in accumulated E & P at the beginning of the year. Before considering the effect of the land sale, Silver had a deficit in current E & P of $50,000. Javiera, the sole shareholder of Silver, has a basis of $200,000 in her stock. Javiera holds the Silver Corporation stock as an investment. If Silver distributes $900,000 to Javiera on December 31, how much income must she report for tax purposes? If an amount is zero, enter "0". Javiera reports a $ basis is $ taxable dividend and of $ After the distribution, Javiera's stock

On September 30, Silver Corporation, a calendar year taxpayer, sold a parcel of land (basis of $400,000) for a $1,000,000 note. The note is payable in five installments, with the first payment due next year. Because Silver did not elect out of the installment method, none of the $600,000 gain is taxed this year. Silver Corporation had a $300,000 deficit in accumulated E & P at the beginning of the year. Before considering the effect of the land sale, Silver had a deficit in current E & P of $50,000. Javiera, the sole shareholder of Silver, has a basis of $200,000 in her stock. Javiera holds the Silver Corporation stock as an investment. If Silver distributes $900,000 to Javiera on December 31, how much income must she report for tax purposes? If an amount is zero, enter "0". Javiera reports a $ basis is $ taxable dividend and of $ After the distribution, Javiera's stock

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter13: Corporations: Earning & Profits And Distributions

Section: Chapter Questions

Problem 12P

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In the current year, Madison Corporation had 50,000 of taxable income at a tax rate of 25%. During the year, Madison began offering warranties on its products and has a Warranty liability for financial reporting purposes of 5,000 at the end of the year. Warranty expenses are not deductible until paid for income tax purposes. Prepare the journal entry to record Madisons income taxes at the end of the year.
Grevilla Corporation is a manufacturing company. The corporation has accumulated earnings of $950,000, and it can establish reasonable needs for $400,000 of that amount. Calculate the amount of the accumulated earnings tax (if any) that Grevilla Corporation is subject to for this year. $_____________
Gosling, Inc., a calendar year, accrual basis corporation, reported $756,000 net income after tax on its financial statements prepared in accordance with GAAP. The corporation's financial records reveal the following information: Gosling earned $3,500 on an investment in tax-exempt municipal bonds. Gosling received an advance payment of rent this year for $25,000. This amount was not included in book income. Gosling's depreciation expense per books was $72,000, and its MACRS depreciation deduction was $105,000. Gosling recorded $58,000 of business meals and $27,000 of entertainment expense for book purposes. Gosling's federal income tax expense per books was $220,000. a. Compute Gosling's taxable income and regular tax liability. b. Prepare a Schedule M-1, page 5, Form 1120, reconciling Gosling's book and taxable income.
TPW, a calendar year taxpayer, sold land with a $560,000 tax basis for $850,000 in February. The purchaser paid $85,000 cash at closing and gave TPW an interest-bearing note for the $765,000 remaining price. In August, TPW received a $61,250 payment from the purchaser consisting of a $38,250 principal payment and a $23,000 interest payment. In the first year after the year of sale, TPW received payments totaling $117,500 from the purchaser. The total consisted of $76,500 principal payments and $41,000 interest payments. Required: For the first year after the year of sale, compute the difference between TPW’s book and tax income resulting from the installment sale method. Is this difference favorable or unfavorable? Using a 21 percent tax rate, determine the effect of the difference on the deferred tax asset or liability generated in the year of sale.
Axelrod Corporation (a calendar year taxpayer) has taxable income of $160,000, and its financial records reflect the following for the year. - Federal income taxes paid - Net operating loss deduction in current year $65,000 45,000 - Current year Gain on an installment sale from a prior year 32,000 - Depreciation deducted on tax return (ADS depreciation would have been $10,000) 40,000 - Interest income on Florida state bonds 14,000 Axelrod Corporation's current E & P is:
Stephens Company has a deductible temporary difference of $2,000,000 at the end of its first year of operations. Its tax rate is 40 percent. Stephens has $1,800,000 of income taxes payable. After a careful review of all available evidence, Stephens determines that it is probable that it will not realize $200,000 of this deferred tax asset. On Stephens Company's statement of financial position at the end of its first year of operations, what is the amount of deferred tax asset? a. $2,000,000. b. $1,800,000. c. $800,000. d. $600,000.