Mozart Inc.’s $98,000 taxable income for 20X1 will be taxed at the 21% corporate tax rate. For tax purposes, its depreciation expense exceeded the depreciation used for financial reporting purposes by
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Mozart Inc.’s $98,000 taxable income for 20X1 will be taxed at the 21% corporate tax rate. For tax purposes, its depreciation expense exceeded the depreciation used for financial reporting purposes by $27,000. Mozart has $45,000 of purchased goodwill on its books; during 20X1, the company determined that the goodwill had suffered a $3,000 impairment of value for financial reporting purposes. None of the goodwill impairment is deductible for tax purposes. Mozart purchased a three-year corporate liability insurance policy on July 1, 20X1, for $36,000 cash. The entire premium was deducted for tax purposes in 20X1.
Required:
- Determine Mozart’s pre-tax book income for 20X1.
- Determine the changes in Mozart’s deferred tax amounts for 20X1.
- Calculate tax expense for Mozart Inc. for 20X1.
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