In its Year 2 income statement, what amount should Shin report as total income tax expense? 3. (TCO B) Justification for the method of determining periodic deferred tax expense is based on the concept of: 4. (TCO B) In Year 2, Ajax, Inc. reported taxable income of $400,000 and pretax financial statement income of $300,000. The difference resulted from $60,000 of nondeductible premiums on Ajax's officers' life insurance and $40,000 of rental income received in advance.
All its income and expenses are reported on from 1020 and it pays a tax that ranges from 15 percent to 39 percent. The shareholders are not liable for a tax based on the corporation's income. However, shareholders must include dividend
Moreover, no gain or loss is recognized to a corporation upon the receipt of money or other property in exchange for the stock of such corporation. The purpose of this is to encourage investors to contribute to corporations. Question 14:20 - What tax years are available to corporations? How do the options differ from other forms of business organizations? Corporations can choose either calendar year or fiscal year.
Ronald Lyday (000337108) LIT1 Task 310.1.2-01-06 Part A (Rev. A) Sole Proprietorship In a Sole Proprietorship the owner is the one responsible for the ownership and conduct of all business. All decisions, whether good or bad, are made by the owner. Income taxes are assessed as personal income for the proprietor, which is at a higher rate than other forms of income. The company can be maintained for as long as the proprietor desires to conduct business on their own.
to take risk. Multiple Choice Question 55 Galan Associates prepared its financial statement for 2008 based on the information given here. The company had cash worth $1,234, inventory worth $13,480, and accounts receivables of $7,789. The company’s net fixed assets are $42,331, and other assets are $1,822. It had accounts payables of $9,558, notes payables of $2,756, common stock of $22,000, and retained earnings of $14,008.
General partners, organized as a Partnership, are fully responsible for liabilities while Limited partners are not. Sole Proprietors are 100% responsible for the liabilities of the organization. The Rights, Responsibilities, and Legal Arrangement among Owners are also a significant part of the decision making process when deciding the type of organization to form. “State corporation laws specify the rights and responsibilities of corporations and their shareholders. Consequently, shareholders have no flexibility to alter their legal treatment with respect to one another, with respect to the corporation, and with respect to outsiders” (15-3).
1. Outright purchase of Smith stock a) Yes, Mr. Jones should purchase the stock of Smith outright, leaving Smithon intact as purchasing the stock of Smith co. is the simple and reasonable transaction where he can also minimize the cost of administrative matters. While issuing debt in his Johnson Services Co. to pay for the Smith Company there can arise debt issue for Johnson co if the cash flow of the company is insufficient in making such purchase to buy Smith co stock. b) Converting C corp to S corp has taxation benefit as C corp faces double taxation. Here, converting Smithon to S corp can give an advantage of having a control of limited or small number of shareholders.
ordinary business deduction. None of the above 3. (TCO I) Under the cash method of tax accounting, tax deductions are generally taken when: (Points : 5) the liability arises. payment is made. the expense is actually incurred.
With a sole proprietorship, the owner pays taxes on the income from the business as part of his or her personal income tax. The company does not pay any business taxes. The owner can sell his or her business at any time and does not have to meet a timeframe for owning the business before selling. An owner of a sole
In February 2011, the case is settled, and Joe refunds $2,500 to the customer. When Joe prepares his 2010 tax return in April 2011, he will include only $1,500 of net revenues from that customer. Your Answer: False The claim of right doctrine requires the recipient of disputed funds to recognize the income. Joe will include the full $4,000 in his 2010 taxable income because he had full control over the funds. He will be allowed to take a deduction on his 2011 tax return for the $2,500 repaid the customer.