McGee Company deducts insurance expense of $84,000 for tax purposes in 2008, but the expense is not yet recognized for accounting purposes. In 2009, 2010, and 2011, no insurance expense will be deducted for tax purposes, but $28,000 of insurance expense will be reported for accounting purposes in each of these years. McGee Company has a tax rate of 40% and income taxes payable of $72,000 at the end of 2008. There were no deferred taxes at the beginning of 2008.
Assuming that income tax payable for 2009 is $96,000, the income tax expense for 2009 would be what amount?© BrainMass Inc. brainmass.com June 3, 2020, 8:52 pm ad1c9bdddf
Please find my response below.
In 2008, we will create a deferred tax liability of 84,000*.4=33,600. This is because we are paying less in taxes now and we ...
The solution determines the income tax expense for McGee Company.