Question
On January 1, Starlight Corp. (a calendar year taxpayer) recorded $600,000 of goodwill as a result of a business acquisition that it made. the corporation
On January 1, Starlight Corp. (a calendar year taxpayer) recorded $600,000 of goodwill as a result of a business acquisition that it made. the corporation elected to amortize it over 15 years for tax accounting and uses the impairment method for financial accounting purposes. Assume the impairment write-offs are $15,000 in Year 1, $60,000 in Year 5, $300,000 in Year 25.
-What is the annual Schedule M1(M3) adjustment for each year during the first 15 years of the amortization period?
-Whatis the annual Schedule M1(M3) adjustment for each year during the last 25 years of the amortization period?
-What is the deferred tax asset or liability balance for Years1,5, and 25, assuming a 35% marginal tax rate?
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