From someone who can’t get on the board. I’m rusty as hell with the tax FSA stuff so I figured someone here could answer it better than me. I understand how you adjust for items taxable/non-taxable items. They give you the NI of 800,000 and they adjust it to get taxable income, even though they don’t add the tax provision. What am I missing. Thanks a lot for your time! > > Assume U.S. GAAP (generally accepted accounting principles) applies unless > otherwise noted. > > A company reports net income of $800,000 for the year. The table below > indicates selected items which were included in net income and their associated > tax status. > > Included in determining > Net Income Tax Status > Depreciation Expense $70,000 $90,000 allowed for tax purposes > Dividend Income $120,000 Dividends not taxable > Fine related to > environmental damage $100,000 Not deductible for tax purposes > R&D Expenditures $50,000 20,000 allowed for tax purposes \> \> The company’s tax rate is 35 percent. The company’s current income taxes \> payable (in ) is closest to: > > A. 206,500. > B. 276,500. > C. 360,500. > > Answer: B > > Net income $800,000 > Add back book depreciation 70,000 > Deduct tax allowed depreciation (90,000) > Deduct Dividend income (120,000) > Add back Fine 100,000 > Add back book R&D 50,000 > Deduct tax allowed R&D (20,000) > Taxable income 790,000 > Current taxes payable 35% x $790,000=276,500
I don’t really understand your question. What aspect of the answer are you having trouble with?