Assume the President signs a stimulus package permitting businesses to expense $250,000 of equipment purchases in the current tax year, provided total equipment purchases do not exceed $750,000. Assume the ABC corporation purchased a machine for $500,000 during the qualifying time period. The machine has a 7-year MACRS life and a 10-year straight line write-off for financial accounting purposes. a. What is the deferred tax liability balance for Years 1, 5, and 9, assuming a 35- percent marginal tax rate? b. What is the journal entry to record the deferred tax benefit in Years 1, 5 and 9?
Assume the President signs a stimulus package permitting businesses to expense $250,000 of equipment purchases in the current tax year, provided total equipment purchases do not exceed $750,000. Assume the ABC corporation purchased a machine for $500,000 during the qualifying time period. The machine has a 7-year MACRS life and a 10-year straight line write-off for financial accounting purposes. a. What is the deferred tax liability balance for Years 1, 5, and 9, assuming a 35- percent marginal tax rate? b. What is the journal entry to record the deferred tax benefit in Years 1, 5 and 9?
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 22P
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