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Please Explain how you got the answer briefly for every question except #1Davison Company determined that the book basis of its net accounts receivable was less than the taxbasis of its net accounts receivable by $800,000 due to a difference in the allowance for bad debtsaccount. This basis difference is characterized asA. Deductible temporary differenceB. Taxable temporary differenceC. Favorable permanent differenceD. Unfavorable permanent differenceCrocker Company Inc. had taxable income of $550,000. At the end of the year it distributes all its aftertax earnings to Jimmy, the companyâs sole shareholder. Jimmyâs marginal ordinary tax rate is 34% and hismarginal tax rate on dividends is 15%. What is the overall tax rate on Crocker and Companyâs pre taxincomeA. 9.9%B. 15%C. 35%D. 43.9%E. 66.7%Logan a 50% shareholder in Military Gar Inc. is comparing the tax consequences of losses from Ccorporations with losses from S Corporations. Assume Military Gear Inc. has $100,000 loss for the year,$75,000 ordinary income from other sources during the year, assuming Logans marginal income tax rateis 15%, how much more tax will logan pay currently if military Gear Inc. is a C corporation compared tothe tax he would pay if it were an S corporation.A. $0B. $3,750C. $7,500D. $11,250Roberto and Reagan are both 25% owner/managers for Bright light Inc. Roberto runs the retail store inSacramento CA, and Reagan runs the retail store in San Francisco CA. Bright Light Inc. generated a$125,000 profit companywide made up of a $75,000 profit from the Sacramento store, a (25,000) lossfrom the San Francisco store, and a combined $75,000 profit from the remaining stores. If Bright LightInc. is an S corporation how much income will be allocated to Roberto?A. $31, 250B. $62,500C. $75,000D. $125,000Coop Inc. owns 40% of Chicken Inc. both Coop and Chicken are corporations. Chicken pays Coop adividend of $10,000 in 2014. Chicken also reports financial accounting earnings of $20,000 for that year.Assume that Coop follows the general rule of accounting for investment in Chicken. What is the amountand nature of the book tax difference to Coop associated with the dividend distribution?A. 2,000 UnfavorableB. 2,000 favorableC. 10,000 unfavorableD. 10,000 favorableE. None of theseOrange Inc. issued 20,000 nonqualified stock options valued at $40,000 in total. The options vest overtwo years. Half in 2014, and half in 2015. One thousand options are exercised in 2015 with a bargainelement on each option of $6. What is the 2015 book tax difference associated with the stock optionsA. 14,000 unfavorableB. 14,000 favorableC. 20,000 unfavorableD. 20,000 favorableE. None of theseRemsco has taxable income of 60,000 and a charitable contribution limit modified taxable income of72,000. Its charitable contributions for the year were 7,500. What is Remscoâs current year charitablecontribution deduction and contribution carryoverA. 6,000 current year; 1,500 carryoverB. 7,500 current year; 0 carryoverC. 1,200 current year; 6,300 carryoverD. 7,200 current year; 300 carryoverAbbot corporation reported pretax book income of 500,000. During the current year, the reserve for baddebts increased by 5,000. In addition tax depreciation exceeded book depreciation by 40,000. Finallyabbot received 3,000 of tax exempt life insurance proceeds from the death of one of its officers. Using atax rate of 34%. Abbots current income tax expense or benefit would beA. 186,320B. 170,000C. 157,080D. 153,680Tuna Corporation reported pretax book income of 1,000,000. During the current year, the net reserve forwarranties increased by 25,000. In addition book depreciation exceeded tax depreciation by 100,000.Finally tuna subtracted a dividends received deduction of 15,000 in computing its current year taxableincome. Book equivalent of taxable income isA. 1,125,000B. 1,110,000C. 1,015,000D. 985,000Tarhell Corporation reported pretax book income of 1,000,000. During the current year the net reservefor warranties increased by 25,000. In addition tax depreciation exceeded book depreciation by 100,000.Finally Tarheel subtracted a dividends received deduction of 25,000 in computing its current year taxableincome. Assume tax rate is 34%. Tarheels accounting effective tax rate is:A. 34%B. 33.15%C. 31.45D. 30.6%
