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FarmTime, Inc. tax planning.

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Lydia is the CFO of FarmTime, Inc. FarmTime's tax advisers have recommended two tax planning ideas that will each provide a $8 million of current-year cash tax savings. One idea is based on a timing difference and is expected to reverse 20 years in the future. The other idea creates a permanent difference that will never reverse. Determine whether these ideas will allow FarmTime to reduce its reported book income tax expense for the current year. Illustrate a preference for one planning strategy over the other in a spreadsheet. Which idea will you recommend to Lydia?

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The expert examines FarmTime, Inc tax planning. The solution is in an Excel file.

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If both options create identical "current-year cash tax savings",? it means that taxes payable are the same for both options in the current year. ...

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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