Farm Corporation reported pretax book loss of $500,000 in 2016. Tax depreciation exceeded book depreciation by $100,000. In addition, Farm received prepaid income of $50,000, which was included on its tax return but was not included in the book loss. Farm had $0 taxable income in 2015 and 2014. Assuming a tax rate of 34%, compute the Company's income tax expense or benefit for 2016.

Question

Quizplus · Accepted Answer

The Answer of Farm Corporation reported pretax book loss of $500,000 in 2016. Tax depreciation exceeded book depreciation by $100,000. In addition, Farm received prepaid income of $50,000, which was included on its tax return but was not included in the book loss. Farm had $0 taxable income in 2015 and 2014. Assuming a tax rate of 34%, compute the Company's income tax expense or benefit for 2016.

Farm Corporation Reported Pretax Book Loss of $500,000 in 2016