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- 6 2 Valuation Allowance. In the current year, Alpha Corporation generated $ 5 0 0 , 0 0 0 of ordinary operating income and
Valuation Allowance. In the current year, Alpha Corporation generated $ of ordinary operating income and incurred a $ capital loss on the sale of marketable securities from its investment portfolio. Alpha expects to generate $ of ordinary operating income in each of the next five years. Alpha incurred no capital gains in its previous three years, so it must carry ove the $ capital loss for up to five years. Alpha estimates that its remaining marketable securities will produce a $ capital gain if sold. Thus, Alpha determines that, more likely than not, the corporation will not realize deduct $ of the current year capital loss. Alpha has no other booktax differences and is subject to a tax rate.
Required:
a Determine Alpha's deferred tax asset and valuation allowance for the current year.
b Determine Alpha's current federal income tax expense, deferred federal income tax expense benefit total federal income tax expense, and federal income taxes payable.
c Prepare the journal entry necessary to record the above amounts.
d Prepare a tax provision reconciliation and effective tax rate reconciliation for the current year.
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