Intermediate Accounting
1st Edition
ISBN: 9780132162302
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Chapter 17, Problem 17.19E
Uncertain Tax Positions. Lewis Eagle Corporation concluded that it was able to exclude $2,500,000 in income from its current tax return Income before the exclusion is $6,000,000. There are no book-tax differences. This income is subject to a 30% tax rate. Based on its technical merits, Lewis Eagle determined that it is more likely than not that the exclusion would be sustained upon examination by tax auditors. The possible outcomes and their related probabilities follow.
| Filed Amount of the Exclusion That Management Expects to Maintain | Likelihood That the Tax Position Will Be Sustained at This Level (%) |
| $2,500,000 | 10% |
| 2,000,000 | 20 |
| 1,500,000 | 25 |
| 1,000,000 | 35 |
| 880,000 | 10 |
Determine the amount of tax benefit from the exclusion that Lewis Eagle should recognize in its tax provision for the current year and prepare the
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Chapter 17 Solutions
Intermediate Accounting
Ch. 17 - Prob. 17.1QCh. 17 - When will income tax expense and income taxes...Ch. 17 - Will permanent differences cause the effective tax...Ch. 17 - When do permanent differences arise?Ch. 17 - How are deferred tax assets and deferred tax...Ch. 17 - Prob. 17.6QCh. 17 - Prob. 17.7QCh. 17 - Prob. 17.8QCh. 17 - Prob. 17.9QCh. 17 - How does a firm determine the need for a valuation...
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