For the year ended December 31, 2014, the Bowling Green Company reported income of $350,000 before provision for income tax. In arriving at taxable income for income tax purposes, the following differences were identified:
Assuming a corporate income tax rate of 30%, Huntsville's current income tax liability as of December 31, 2014, is

Question

For the year ended December 31, 2014, the Bowling Green Company reported income of $350,000 before provision for income tax. In arriving at taxable income for income tax purposes, the following differences were identified: 
 Assuming a corporate income tax rate of 30%, Huntsville's current income tax liability as of December 31, 2014, is

Quizplus · Accepted Answer

The taxable income for income tax purposes can be calculated as follows:
Income before provision for income tax: $350,000
Plus: Depreciation expenses for tax purposes (book depreciation - tax depreciation): $40,000 - $30,000 = $10,000
Minus: Nondeductible expenses (in this case, life insurance premium): $30,000
Taxable income: $350,000 + $10,000 - $30,000 = $330,000
Corporate income tax liability at 30%: $330,000 x 0.30 = $99,000
Therefore, the current income tax liability as of December 31, 2014, is $101,400 (closest option: B).

For the Year Ended December 31, 2014, the Bowling Green