Question

During its most recent accounting period, Conner Enterprises income before taxes was $728,000. In determining the income before taxes Conner included $42,000 in fines and penalties. If Connor’s income tax rate is 30% and are no other book-tax differences, what amount of income tax would Connor owe for the accounting period?

In 2019, Solo reported Income before Depreciation and Income Tax of $720,000. In 2019, Depreciation Expense was $120,000 on its GAAP based income statement and $80,000 for income tax purposes. Solo’s income tax rate is still 40%. Which of the following would not be correct based upon 2019’s recording of Solo’s income tax payment?

Answer 1

INCOME TAX COMPUTATION FOR CONNER ENTEPRISES:

Income Before Taxes - $728000

Add:

Fines and Penalties not deductible $42000

Adjusted Income before Taxes $770000

Tax Rate 30%

Income Tax $231000

NOTE: It is assumed that the fines and penalties are not deductible or do not include any item deductible.

INCOME TAX COMPUTATION FOR SOLO ENTEPRISES:

Income Before Dep. and Income Taxes $720000

Less:

Depreciation(Income tax purposes) $120000

Adjusted Income before Taxes $600000

Tax Rate 40%

Income Tax $240000

Note: For Income Tax Calculation, Depreciation as per Income tax Purposes is relevant.

Options for the second question are not provided.