Accounting for income taxes:

- Earnings before taxes is $200,000

- Depreciation by GAAP $20,000, tax purposes is $26,000

- Illegal payment made by the Orange company on January 1st of 2019 of $30,000. An illegal payment of $10,000 made by Orange in 2017 has been declared illegal by the courts on November 30th, 2020.

- July 1st 2020, Orange sold a building with a depreciation cost basis of $77,000 for $60,000

Find the amount of taxable income for the year 2020.

The way I solved this is:

Earnings before taxes:	$ 200,000
Permanent differences: Illegal payment in 2020	$ 30,000
Temporary differences: Depreciation expense	$ (6,000)
Taxable income	$ 224,000

I'm not sure about 2 of the bullet points.

For the illegal payment made by orange in 2017, because it was declared illegal in 2020 should I add that back into taxable income or ignore it because the payment was from 2017?

Also for the sale of the building, my text book says that the income statement will show a revenue come from "unrealized gain from recording investments at fair value, taxable when the asset is sold". The building wouldn't be included in this as it is not an investment correct?

Thanks!