You have been assigned to compute the income tax provision for Tulip City Flowers, Inc. (TCF) as
Question:
You have been assigned to compute the income tax provision for Tulip City Flowers, Inc. (TCF) as of December 31, 2014. The Company’s federal income tax rate is 34%. The Company’s Income Statement for 2014 is provided below:
You have identified the following permanent differences:
Interest income from municipal bonds: $10,000
Nondeductible stock compensation: $5,000
Domestic production activities deduction (DPAD): $8,000
Nondeductible fines: $1,000
TCF prepared the following schedule of temporary differences from the beginning of the year to the end of the year:
a. Compute TCF’s current income tax expense or benefit for 2014.
b. Compute TCF’s deferred income tax expense or benefit for 2014.
c. Prepare a reconciliation of TCF’s total income tax provision with its hypothetical income tax expense in both dollars and rates.
d. Assume TCF’s tax rate increased to 35% in 2014. Recompute TCF’s deferred income tax expense or benefit for 2014 using the following template:
Step by Step Answer:
To compute the income tax provision for Tulip City Flowers Inc for 2014 lets break down the required calculations step by step a Compute TCFs current income tax expense or benefit for 2014 Well begin ...View the full answer
Taxation Of Individuals And Business Entities 2015
ISBN: 9780077862367
6th Edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver
