On January 1, 2013, Ameen Company purchased a building for $36 million. Ameen uses straight-line depreciationfor financial statement reporting and MACRS for income tax reporting. At December 31, 2017, the book valueof the building was $30 million and its tax basis was $20 million. At December 31, 2018, the book value of thebuilding was $28 million and its tax basis was $13 million. There were no other temporary differences and nopermanent differences. Pretax accounting income for 2018 was $45 million.Required:1. Prepare the appropriate journal entry to record Ameen’s 2018 income taxes. Assume an income tax rate of40%.2. What is Ameen’s 2018 net income?

On January 1, 2013, Ameen Company purchased a building for $36 million. Ameen uses straight-line depreciationfor financial statement reporting and MACRS for income tax reporting. At December 31, 2017, the book valueof the building was $30 million and its tax basis was $20 million. At December 31, 2018, the book value of thebuilding was $28 million and its tax basis was $13 million. There were no other temporary differences and nopermanent differences. Pretax accounting income for 2018 was $45 million.Required:1. Prepare the appropriate journal entry to record Ameen’s 2018 income taxes. Assume an income tax rate of40%.2. What is Ameen’s 2018 net income?

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter14: Choice Of Business Entity—operations And Distributions

Section: Chapter Questions

Problem 35P

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