Kramerica Corporation took an aggressive tax position in its current year's tax return,claiming a $370,000 deduction.The company reported $770,000 in taxable income before considering the tax deduction,and is subject to a 33% income tax rate.Tax authorities have challenged this type of tax deduction in the past and Kramerica is now concerned about the realizability of this tax deduction in the future.However,management believes that it is more likely than not that the firm will sustain the tax benefits upon examination by tax authorities.The company provides the following analysis regarding the probabilities of sustaining the tax deduction:
Prepare the journal entry to record the current year's tax provision and the liability for the uncertain tax provision.

Question

Kramerica Corporation took an aggressive tax position in its current year's tax return,claiming a $370,000 deduction.The company reported $770,000 in taxable income before considering the tax deduction,and is subject to a 33% income tax rate.Tax authorities have challenged this type of tax deduction in the past and Kramerica is now concerned about the realizability of this tax deduction in the future.However,management believes that it is more likely than not that the firm will sustain the tax benefits upon examination by tax authorities.The company provides the following analysis regarding the probabilities of sustaining the tax deduction:
  Prepare the journal entry to record the current year's tax provision and the liability for the uncertain tax provision.

Quizplus · Accepted Answer

The Answer of Kramerica Corporation took an aggressive tax position in its current year's tax return,claiming a $370,000 deduction.The company reported $770,000 in taxable income before considering the tax deduction,and is subject to a 33% income tax rate.Tax authorities have challenged this type of tax deduction in the past and Kramerica is now concerned about the realizability of this tax deduction in the future.However,management believes that it is more likely than not that the firm will sustain the tax benefits upon examination by tax authorities.The company provides the following analysis regarding the probabilities of sustaining the tax deduction:
  Prepare the journal entry to record the current year's tax provision and the liability for the uncertain tax provision.

Kramerica Corporation Took an Aggressive Tax Position in Its Current