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5. Suppose lllini Company has claimed a tax credit of $600 in its tax return that creates an uncertain tax benefit. Illini determines that the
5. Suppose lllini Company has claimed a tax credit of $600 in its tax return that creates an uncertain tax benefit. Illini determines that the tax benefit of $600 is more-likely-than-not of being sustained on examination. Ilini believes that the likelihood that a $600, $400, $300, or $100 tax benefit will be sustained is 25%, 30%, 20%, and 25%, respectively. For this question, please ignore any interest on the tax liability. Suppose IRS rejects $150 (out of $600) of the claimed credit on examination. Which one of the following is correct? A. Illini shall record a $450 tax benefit on settlement. B. Illini shall record a $50 tax benefit on settlement. C. Illini shall record a $150 tax expense on settlement. Dni shall record a $50 tax expense on settlement
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