Question
Can somebody help me with this exercise. I got stuck! Ohio Corp. reported a deferred tax liability of $6,000,000 for the year ended December 31,
Can somebody help me with this exercise. I got stuck!
Ohio Corp. reported a deferred tax liability of $6,000,000 for the year ended December 31, 2020, when the tax rate was 40%.The deferred tax liability was related to a temporary difference of $15,000,000 caused by an installment sale in 2020.The temporary difference is expected to reverse in years 2021 through 2023 as $5,000,000 of installment income is expected to be recognized as taxable income in each of those years.There are no other temporary differences.A new tax law was passed in 2021 with the tax rate remaining 40% through December 31, 2021, then increase to 45% for tax years beginning after December 31, 2021.Taxable income for the year 2021 is $30,000,000.
Income tax expense reported by Ohio on its year end December 31, 2021 income statement is:
A) $12,000,000
B) $10,500,000
C) $10,000,000
D) $11,250,000
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