THe depreciation recapture provisions are designed to prevent taxpayers from converting capial gains into ordinary income.
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Q: Depreciation is needed only for computing income taxes. True or false?
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- Depreciation is needed only for computing income taxes. True or false?TRUE OR FALSE? An excess tax depreciation will result to a deferred tax liability.With respect to transaction and translation gains and losses: a. transaction gains and losses are taxable but have no immediate cash flow impact. b. transaction gains and losses have immediate cash flow and tax consequences, translation gains and losses have neither. c. transaction gains and losses have an immediate cash flow impact, but taxation is deferred until the related assets are sold. d. transaction and translation gains are taxable, but only transaction losses are tax deductible.
- What are the benefits of calculating depreciation differently for financial reports and for tax purposes?Will the existence of unused tax losses always lead to the recognition of a deferred tax assets? Explain your answer with suitable example. Provide An excellent explanation of under what condition unused tax losses can create deferred tax assets.The benefit of future deductible amounts can be achieved only if future income is sufficient to take advantage of the deferred deductions. For that reason, not all deferred tax assets will ultimately be realized. How is this possibility reflected in the way we recognize deferred tax assets?
- Temporary differences result in future taxable or deductible amounts when the related asset or liability is recovered or settled. Some differences, though, are not temporary. What events create temporary differences? What events create permanent differences? Please provide examples.What is the depreciation method that is used for tax accounting purposes? How is it different than the methods that are required by GAAP to be used for financial accounting purposes?Using the straight-line method of depreciation for reporting purposes and accelerateddepreciation for tax purposes would most likely result in a:A . valuation allowance.B . deferred tax asset.C . temporary diff erence.
- Rationale for nonrecognition includes which of the following? I. A refinement of the realization concept, which postpones recognition of appreciation in value until the taxpayer disposes of a property Under the substance-over-form doctrine, new property acquired in a transaction is viewed as a continuation of the original investment. II. III. The taxpayer lacks the wherewithal to pay the tax on a realized gain because the amount realized on the transaction is reinvested in the replacement asset. Oa. Statements L, II, and III are correct. Ob. Statements II and III are correct. Oc. Only statement I is correct. Od. Only statement III is correct. Oe. Only statement II is correct. PrevTRUE OR FALSE?1. An excess tax depreciation will result to a deferred tax liability.2. If the carrying amount of an asset is higher than the tax base, the difference is a future taxable amount and therefore there us a deferred tax liability.3. A permanent difference that is nondeductible will have no deferred tax consequence.