Marchal Inc., a calendar year, accrual basis taxpayer, made the following state income tax payments during 2018.
On December 28, Marchal's tax department calculated that the corporation's actual 2018 state income tax liability was $67,140. Consequently, Marchal accrued a $6,140 liability for state income tax payable at year end.
a. Compute Marchal's 2018 state income tax expense per books.
b. If Marchal has not adopted the recurring item exception as its method of accounting for state income taxes, compute Marchal's 2018 federal deduction for state income tax.

Question

Marchal Inc., a calendar year, accrual basis taxpayer, made the following state income tax payments during 2018. 
On December 28, Marchal's tax department calculated that the corporation's actual 2018 state income tax liability was $67,140. Consequently, Marchal accrued a $6,140 liability for state income tax payable at year end.
a. Compute Marchal's 2018 state income tax expense per books.
b. If Marchal has not adopted the recurring item exception as its method of accounting for state income taxes, compute Marchal's 2018 federal deduction for state income tax.

Quizplus · Accepted Answer

The Answer of Marchal Inc., a calendar year, accrual basis taxpayer, made the following state income tax payments during 2018. 
On December 28, Marchal's tax department calculated that the corporation's actual 2018 state income tax liability was $67,140. Consequently, Marchal accrued a $6,140 liability for state income tax payable at year end.
a. Compute Marchal's 2018 state income tax expense per books.
b. If Marchal has not adopted the recurring item exception as its method of accounting for state income taxes, compute Marchal's 2018 federal deduction for state income tax.