Question
1. In 2019, Nighthawk Corporation, a calendar year C corporation, has $5,620,000 of adjusted taxable income and $168,600 of business interest income. Nighthawk has no
1. In 2019, Nighthawk Corporation, a calendar year C corporation, has $5,620,000 of adjusted taxable income and $168,600 of business interest income. Nighthawk has no floor plan financing interest. The business interest expense for the year is $2,248,000.
a. Assume that Nighthawk has average gross receipts for the prior three-year period of $30,400,000.
Determine Nighthawk's current-year deduction for business interest. $_______________________
b. Assume that Nighthawk has average gross receipts for the prior three-year period of $18,000,000.
Determine Nighthawk's current-year deduction for business interest. $_____________________
2.
Prance, Inc., earns pretax book net income of $1,639,500 in 2018. Prance acquires a depreciable asset that year, and first-year tax depreciation exceeds book depreciation by $163,950. Prance reported no other temporary or permanent book-tax differences. The relevant U.S. Federal corporate income tax rate is 21%, and Prance earns an after-tax rate of return on capital of 8%.
Enter below the 2018 end-of-year balance in Prance's deferred tax asset and deferred tax liability balance sheet accounts.
If an amount is zero, enter "0". If required, round your answer to nearest whole value.
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