F53. Loraine (a calendar year taxpayer) reported the following transactions, all of which were properly included in a timely filed return.Gross receiptsCost of salesGross profitCapital gainCapital lossTotal income$40,000(25,000)$975,000(850,000)$125,00015,000$140,000a. Presuming the absence of fraud, how much of an omission from gross income would trigger the six-year statute of limitations?0X

Any person or business that owes taxes to the federal, state, or local governments is referred to as…

Gross receipts Cost of sales Gross profit Capital gain Capital loss Total income year taxpayer) reported the following transactions, all of which were properly included in a timely filed return. $975,000 (850,000) $125,000 $40,000 (25,000) 15,000 $140,000 a. Presuming the absence of fraud, how much of an omission from gross income would trigger the six-year statute of limitations? 0 X

Gross receipts Cost of sales Gross profit Capital gain Capital loss Total income year taxpayer) reported the following transactions, all of which were properly included in a timely filed return. $975,000 (850,000) $125,000 $40,000 (25,000) 15,000 $140,000 a. Presuming the absence of fraud, how much of an omission from gross income would trigger the six-year statute of limitations? 0 X

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter26: Tax Practice And Ethics

Section: Chapter Questions

Problem 35P

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You were asked by your audit client Panga Inc., to assist them in preparing its income tax return for the period ended December 31, 2021. You investigation revealed the following information: Pre-tax financial income P10,000,000 Estimated litigation loss recognized as a provision for the current year 600,000 Accrued rental income 1,200,000 Prepaid operating expenses 250,000 Unearned rental income 300,000 Dividend income from domestic corporation 500,000 Life insurance expense 300,000 Current income tax is 25% and is expected to remain in 2022 but will increase to 30% in 2023. Assuming all temporary differences will clear by 2022, what is the total tax expense for the year?
1. In the third quarter of 2019, a taxpayer engaged in the sale of services whose annual gross receipts do not exceed P3M has the following data: Accounts receivable, beginning of quarter P 50,000; Sales during the quarter 100,000; Accounts receivable, end of quarter 75,000; Purchase of supplies, total invoice amount 11,200. The percentage tax due for the quarter is 2. In the third quarter of 2019, a taxpayer engaged in the sale of services whose annual gross receipts do not exceed P3M has the following data: Accounts receivable, beginning of quarter P 50,000; Sales during the quarter 100,000; Accounts receivable, end of quarter 75,000; Purchase of supplies, total invoice amount 11,200. Assuming the taxpayer is VAT-registered, the VAT payable is:
Ms. Kirsten provided information to the BIR leading to the recovery of P8,000,000 unpaid taxes. Compute for a. Final withholding tax b. Net amount to be released to the tax informer
The following program has been prepared for the audit of accruedreal estate taxes of a client that pays taxes on 25 different pieces of property, some ofwhich have been acquired in the current year:1. Obtain a schedule of accrued taxes from the client and tie the total to the generalledger.2. Compare the charges for annual tax payments with property tax assessment bills.3. Recompute accrued/prepaid amounts for all bills on the basis of the portion of theyear expired.a. State the purpose of each procedure.b. Evaluate the adequacy of the audit program
A corporation filed its Annual Income Tax Return for the taxable year 2018 on April 15, 2019 together with its required attachments such as the Audited Annual Financial Statements. On March 17, 2020, the company’s accountant discovered an error for excluding a sales amounting to Php7.5M which comprises a 30% under declaration of sales. 1. What necessary action must be done by the company in relation to its discovery? 2. Assume that the company was subjected to a BIR audit or was issued a Letter of Authority (LOA) prior to the amendment of its Annual Income Tax Return, is the company allowed to make any amendment?
Shear Co.'s Year 1 financial statements included profit from an installment sale of $2,600 that was recognized but not received and credit loss expenses of $1,400. No receivables were written off during the year. It is anticipated that both items will be recognized for tax purposes in Year 3. The enacted tax rates are 30% in Year 1 and 25% in Year 3. What amount should Shear report as deferred income tax expense in its Year 1 income statement? A. $300 B. $360 C. $420 D. $780
Indicate whether the following statements are "True" or "False" regarding the statute of limitations. a. If no return is filed or a fraudulent return is filed, assessments can be made at any time. b. If a taxpayer omits an amount of gross income in excess of 25 percent of the gross income stated on the return, the statute of limitations does not apply. c. In general, any tax that is imposed must be assessed within three years of the later of (a) the filing date of the return or (b) the unextended due date of the return. d. The statute of limitations may be extended for a fixed period of time by mutual consent of the IRS and the taxpayer.
The following information came from an IRS audit of a sole proprietor named John Doe. Using the “Cash T” approach, compute the probable over/understatement of income as computed by the IRS agent. Schedule C gross receipts ........................$112,610 Cost of goods sold ...................................... 65,414 Schedule C total cash expenses ................. 30,023 Rental income .........................................…. 5,318 Rental expenses (all cash) .....................….. 6,330 Beginning bank account balance ................. 7,873 Ending bank account balance ..................... 17,265 Insurance proceeds received (taxable) ……. 4,300 Principal payments on rental property loan… 2,894 Personal living expenses ............................. 26,550 Personal auto expenses ................................ 9,788 Social security benefits received …………….. 6,500 Gifts of cash received from relatives ……………
The company’s trial balance is listed below. What are the journal entries that should be recorded for the Year 2 ASC 740 provision? There are two of them. Assume a tax rate of 40% and there are no state or foreign taxes to consider. The company is an accrual basis taxpayer. All work must be shown in a clear and organized format. Year 1 Year 2 Cash 19,400 48500 A/R 30,000 90000 Allowance for Bad Debt -5,000 -25000 Prepaid Supplies 500 1500 DTA (DTL) 2000 2000 A/P -15000 -45000 Income Tax Payable -14000 - R/E - -17900 Revenue -50000 -100000 Political Contributions 100 900 Wages 15000 25000 Bad Debt 5000 20000 Income Tax Expense 12000 - 0 0
A company reported net income of 9.3 million; 10.3 million and 9.7 million for the years 2020, 2021 and 2022 respectively. In an audit conducted in 2022, the following was determined: a. Harry failed to accrue interest on the following notes. It was revealed that Harry recognizes the total interest income on the notes upon its collection on its due date. Principal Date Received Interest Due Date Note receivable - A 500,000 June 1, 2020 12% October 1, 2021 Note receivable - B 400,000 May 31, 2021 15% June 30, 2022 Note receivable - C 750,000 October 31, 2020 18% November 30, 2022 b. Harry paid 15 months' rent on June 1, 2022 amounting to 210,000. Harry uses the asset method in recording prepayments. No adjustments were made yet concerning this. c. Payment of salaries in 2020 amounting to 380,000 was inadvertently charged against the cash on hand. It should have been charged to cash in bank. d. The ending inventory in 2020 is overstated by 450,000 while the beginning inventory in 2022 is…
A corporation filed its Annual Income Tax Return for the taxable year 2018 on April 15, 2019 together with its required attachments such as the Audited Annual Financial Statements. On March 17, 2020, the company’s accountant discovered an error for excluding a sales amounting to Php7.5M which comprises a 30% under declaration of sales. What necessary action must be done by the company in relation to its discovery?
a taxpayer changed from the cash method to the accrual method. At the beginning of the year, accounts receivable totaled $250,000, accounts payable totaled $90,000, and inventory on hand totaled $320,000.\\na. What is the amount of the adjustment due to the change in accounting method?\\nb. Is the adjustment positive or negative?\\nc. If the change is voluntary, when (and in what amount) does the taxpayer recognize income/deduction?\\nd. If the change is involuntary, when (and in what amount) does the taxpayer recognize income/deduction?