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1 In 2011, Carbonfab Manufacturers Inc. expensed $...

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1 In 2011, Carbonfab Manufacturers Inc. expensed $125,000 of depreciation for book purposes, but for tax purposes, it deducted $179,000. Carbonfab also sold equipment for $500,000. The book adjusted basis of the equipment sold was $350,000, while the adjusted basis for tax purposes was $210,000. What is the total book-tax difference associated with depreciation and the gain on sale? Is it favorable or unfavorable? What amount of the book-tax difference is permanent and what amount is temporary?,FEEDBACK NEEDED PART A QUESTIONS Fill in the Blank - Use the following terms to complete the sentences listed below. Note that not all terms will be used and no term is used more than once. Units of Production 1120S Partnership Ordinary income K-1 Schedule C Section 1245 Schedule M-3 AGI Proprietorship Capital gains 200% Declining Balance Straight-line 1065 Dividends Section 1231 Schedule E Amortization Corporation Schedule M-1 1. Schedule M-3 is a form for corporations with total assets in excess of $10million. 2. Section 1231 assets typically create long-term capital gains or ordinary losses when sold. 3. The most common type of depreciation used for book purposes is 200% Declining. 4. Corporations are to include the amount of net long-term capital gain in Ordinary income. 5. The partnership return is filed on Form 1120S . 6. A Limited Liability Company with more than one member (owner) may file a tax return as a 1065 without having to file an election. 7. The most common type of depreciation used for tax purposes is Straight-line. 8. The most notable difference between an individual tax return and a corporate return isDividends. 9. The individual partner?s portion of the partnership return is found onaCapital gains. 10. ACorporation is an entity type that is legally separate from its owners. 1. Teddy purchased only one asset during the current year. It placed in service machinery (7-year property) on October 1st with a basis of $76,500. Calculate the maximum depreciation expense, rounded to the nearest whole number (ignoring section 179 and bonus expensing). Answer: The asset's recovery period is 7 years and the mid-quarter convention applies since more than 40 percent of the property was placed in service during the fourth quarter. The calculation is $76,500 x .0357 = $2,731 2. In 2011, Carbonfab Manufacturers Inc. expensed $125,000 of depreciation for book purposes, but for tax purposes, it deducted $179,000. Carbonfab also sold equipment for $500,000. The book adjusted basis of the equipment sold was $350,000, while the adjusted basis for tax purposes was $210,000. What is the total book-tax difference associated with depreciation and the gain on sale? Is it favorable or unfavorable? What amount of the book-tax difference is permanent and what amount is temporary? Answer: Total book-tax difference = $179,000 ? ($179,000 - $125,000) ? ($179,000 - $210,000) = $86,000 It is unfavorable and the amount of book-tax difference is temporary. PART B QUESTIONS Fill in the Blank - Use the following terms to complete the sentences listed below. Note that not all terms will be used and no term is used more than once. Units of Production 1120S Partnership Ordinary income K-1 Schedule C Section 1245 Schedule M-3 AGI Proprietorship Capital gains 200% Declining Balance Straight-line 1065 Dividends Section 1231 Schedule E Amortization Corporation Schedule M-1 1. Schedule M-3 is a form for corporations with total assets in excess of $10million. 2. Amortization assets typically create long-term capital gains or ordinary losses when sold. 3. The most common type of depreciation used for book purposes is Straight line . 4. Corporations are to include the amount of net long-term capital gain in Schedule M-1 . 5. The partnership return is filed on Form 1065 6. A Limited Liability Company with more than one member (owner) may file a tax return as a Partnership without having to file an election. 7. The most common type of depreciation used for tax purposes is Declining balance 8. The most notable difference between an individual tax return and a corporate return is Capital gains . 9. The individual partner?s portion of the partnership return is found on a K-1 . 10. A Corporation is an entity type that is legally separate from its owners. 1.Teddy purchased only one asset during the current year. It placed in service machinery (7-year property) on October 1st with a basis of $76,500. Calculate the maximum depreciation expense, rounded to the nearest whole number (ignoring section 179 and bonus expensing). If Section 179 applies, Teddy can elect to expenses of $76,500. If Section 179 and bonus expenses not applies. The Amount of maximum depreciation for the 1st year would be as follows: = $76,500 x 14.29% (7-years MACRS) =$10,,932/- 1 In 2011, Carbonfab Manufacturers Inc. expensed $125,000 of depreciation for book purposes, but for tax purposes, it deducted $179,000. Carbonfab also sold equipment for $500,000. The book adjusted basis of the equipment sold was $350,000, while the adjusted basis for tax purposes was $210,000. What is the total book-tax difference associated with depreciation and the gain on sale? Is it favorable or unfavorable? What amount of the book-tax difference is permanent and what amount is temporary? Answer Tax difference = 179000-125000 = $54000 favourable and temporary Gain on sale = (500000-350000)-(500000-210000) = -$140000 unfavourable and permanent FEEDBACK NEEDED PART A QUESTIONS Fill in the Blank - Use the following terms to complete the sentences listed below. Note that not all terms will be used and no term is used more than once. Units of Production 1120S Partnership Ordinary income K-1 Schedule C Section 1245 Schedule M-3 AGI Proprietorship Capital gains 200% Declining Balance Straight-line 1065 Dividends Section 1231 Schedule E Amortization Corporation Schedule M-1 1. Schedule M-3 is a form for corporations with total assets in excess of $10million. 2. Section 1231 assets typically create long-term capital gains or ordinary losses when sold. 3. The most common type of depreciation used for book purposes is 200% Declining. 4. Corporations are to include the amount of net long-term capital gain in Ordinary income. 5. The partnership return is filed on Form 1120S . 6. A Limited Liability Company with more than one member (owner) may file a tax return as a 1065 without having to file an election. 7. The most common type of depreciation used for tax purposes is Straight-line. 8. The most notable difference between an individual tax return and a corporate return isDividends. 9. The individual partner?s portion of the partnership return is found onaCapital gains. 10. ACorporation is an entity type that is legally separate from its owners. 1. Teddy purchased only one asset during the current year. It placed in service machinery (7-year property) on October 1st with a basis of $76,500. Calculate the maximum depreciation expense, rounded to the nearest whole number (ignoring section 179 and bonus expensing). Answer: The asset's recovery period is 7 years and the mid-quarter convention applies since more than 40 percent of the property was placed in service during the fourth quarter. The calculation is $76,500 x .0357 = $2,731 2. In 2011, Carbonfab Manufacturers Inc. expensed $125,000 of depreciation for book purposes, but for tax purposes, it deducted $179,000. Carbonfab also sold equipment for $500,000. The book adjusted basis of the equipment sold was $350,000, while the adjusted basis for tax purposes was $210,000. What is the total book-tax difference associated with depreciation and the gain on sale? Is it favorable or unfavorable? What amount of the book-tax difference is permanent and what amount is temporary? Answer: Total book-tax difference = $179,000 ? ($179,000 - $125,000) ? ($179,000 - $210,000) = $86,000 It is unfavorable and the amount of book-tax difference is temporary. PART B QUESTIONS Fill in the Blank - Use the following terms to complete the sentences listed below. Note that not all terms will be used and no term is used more than once. Units of Production 1120S Partnership Ordinary income K-1 Schedule C Section 1245 Schedule M-3 AGI Proprietorship Capital gains 200% Declining Balance Straight-line 1065 Dividends Section 1231 Schedule E Amortization Corporation Schedule M-1 1. Schedule M-3 is a form for corporations with total assets in excess of $10million. 2. Amortization assets typically create long-term capital gains or ordinary losses when sold. 3. The most common type of depreciation used for book purposes is Straight line . 4. Corporations are to include the amount of net long-term capital gain in Schedule M-1 . 5. The partnership return is filed on Form 1065 6. A Limited Liability Company with more than one member (owner) may file a tax return as a Partnership without having to file an election. 7. The most common type of depreciation used for tax purposes is Declining balance 8. The most notable difference between an individual tax return and a corporate return is Capital gains . 9. The individual partner?s portion of the partnership return is found on a K-1 . 10. A Corporation is an entity type that is legally separate from its owners. 1.Teddy purchased only one asset during the current year. It placed in service machinery (7-year property) on October 1st with a basis of $76,500. Calculate the maximum depreciation expense, rounded to the nearest whole number (ignoring section 179 and bonus expensing). If Section 179 applies, Teddy can elect to expenses of $76,500. If Section 179 and bonus expenses not applies. The Amount of maximum depreciation for the 1st year would be as follows: = $76,500 x 14.29% (7-years MACRS) =$10,,932/- 1 In 2011, Carbonfab Manufacturers Inc. expensed $125,000 of depreciation for book purposes, but for tax purposes, it deducted $179,000. Carbonfab also sold equipment for $500,000. The book adjusted basis of the equipment sold was $350,000, while the adjusted basis for tax purposes was $210,000. What is the total book-tax difference associated with depreciation and the gain on sale? Is it favorable or unfavorable? What amount of the book-tax difference is permanent and what amount is temporary? Answer Tax difference = 179000-125000 = $54000 favourable and temporary Gain on sale = (500000-350000)-(500000-210000) = -$140000 unfavourable and permanent I have two different answers for the same question and don't know which of the correct answers. Part A &B must be same answers. Please check which one is the right method .,Hi, i need clarification on these questions. I have received two different answers on the same questions. please double check the two solution and let me know which is correct. thanks. which of the two answers below is correct 1A In 2011, Carbonfab Manufacturers Inc. expensed $125,000 of depreciation for book purposes, but for tax purposes, it deducted $179,000. Carbonfab also sold equipment for $500,000. The book adjusted basis of the equipment sold was $350,000, while the adjusted basis for tax purposes was $210,000. What is the total book-tax difference associated with depreciation and the gain on sale? Is it favorable or unfavorable? What amount of the book-tax difference is permanent and what amount is temporary? Answer: Total book-tax difference = $179,000 ? ($179,000 - $125,000) ? ($179,000 - $210,000) = $86,000 It is unfavorable and the amount of book-tax difference is temporary. ============================ 1 B In 2011, Carbonfab Manufacturers Inc. expensed $125,000 of depreciation for book purposes, but for tax purposes, it deducted $179,000. Carbonfab also sold equipment for $500,000. The book adjusted basis of the equipment sold was $350,000, while the adjusted basis for tax purposes was $210,000. What is the total book-tax difference associated with depreciation and the gain on sale? Is it favorable or unfavorable? What amount of the book-tax difference is permanent and what amount is temporary? Answer Tax difference = 179000-125000 = $54000 favourable and temporary Gain on sale = (500000-350000)-(500000-210000) = -$140000 unfavourable and permanent 2.which of the two answers below is correct? 2.Teddy purchased only one asset during the current year. It placed in service machinery (7-year property) on October 1st with a basis of $76,500. Calculate the maximum depreciation expense, rounded to the nearest whole number (ignoring section 179 and bonus expensing) Answer: The asset's recovery period is 7 years and the mid-quarter convention applies since more than 40 percent of the property was placed in service during the fourth quarter. The calculation is $76,500 x .0357 = $2,731 (Maximum depreciation expense for period of 7 years is 3.57%). teddy purchased only one asset during the year, so where did you get the 40% of the purchased asset? 2..Teddy purchased only one asset during the current year. It placed in service machinery (7-year property) on October 1st with a basis of $76,500. Calculate the maximum depreciation expense, rounded to the nearest whole number (ignoring section 179 and bonus expensing). If Section 179 applies, Teddy can elect to expenses of $76,500. If Section 179 and bonus expenses not applies. The Amount of maximum depreciation for the 1st year would be as follows: = $76,500 x 14.29% (7-years MACRS) =$10,,932/- Hi, i need clarification on these questions. I have received two different answers on the same questions. please double check the two solution and let me know which is correct. thanks. which of the two answers below is correct 1A In 2011, Carbonfab Manufacturers Inc. expensed $125,000 of depreciation for book purposes, but for tax purposes, it deducted $179,000. Carbonfab also sold equipment for $500,000. The book adjusted basis of the equipment sold was $350,000, while the adjusted basis for tax purposes was $210,000. What is the total book-tax difference associated with depreciation and the gain on sale? Is it favorable or unfavorable? What amount of the book-tax difference is permanent and what amount is temporary? Answer: Total book-tax difference = $179,000 ? ($179,000 - $125,000) ? ($179,000 - $210,000) = $86,000 It is unfavorable and the amount of book-tax difference is temporary. ============================ 1 B In 2011, Carbonfab Manufacturers Inc. expensed $125,000 of depreciation for book purposes, but for tax purposes, it deducted $179,000. Carbonfab also sold equipment for $500,000. The book adjusted basis of the equipment sold was $350,000, while the adjusted basis for tax purposes was $210,000. What is the total book-tax difference associated with depreciation and the gain on sale? Is it favorable or unfavorable? What amount of the book-tax difference is permanent and what amount is temporary? Answer Tax difference = 179000-125000 = $54000 favourable and temporary Gain on sale = (500000-350000)-(500000-210000) = -$140000 unfavourable and permanent 2.which of the two answers below is correct? 2.Teddy purchased only one asset during the current year. It placed in service machinery (7-year property) on October 1st with a basis of $76,500. Calculate the maximum depreciation expense, rounded to the nearest whole number (ignoring section 179 and bonus expensing) Answer: The asset's recovery period is 7 years and the mid-quarter convention applies since more than 40 percent of the property was placed in service during the fourth quarter. The calculation is $76,500 x .0357 = $2,731 (Maximum depreciation expense for period of 7 years is 3.57%). teddy purchased only one asset during the year, so where did you get the 40% of the purchased asset? 2..Teddy purchased only one asset during the current year. It placed in service machinery (7-year property) on October 1st with a basis of $76,500. Calculate the maximum depreciation expense, rounded to the nearest whole number (ignoring section 179 and bonus expensing). If Section 179 applies, Teddy can elect to expenses of $76,500. If Section 179 and bonus expenses not applies. The Amount of maximum depreciation for the 1st year would be as follows: = $76,500 x 14.29% (7-years MACRS) =$10,,932

 

Paper#4566 | Written in 18-Jul-2015

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