Income Taxes

Question 1

What are the general rules for reporting deferred taxes on the balance sheet?

Answer 1

Question 2

How do you calculate the effective tax rate when financial net income includes non-taxable and non-deductible items?

Answer 2

Question 3

How are permanent and temporary differences added or subtracted when calculating taxable income?

Answer 3

Question 4

What are the do’s and don’ts for calculating deferred tax liabilities and assets

Answer 4

Question 5

How do you determine which tax rate to use for calculating a deferred tax liability when multiple future rates are mentioned?

Answer 5

Question 6

8 main temporary/permanent differences

Answer 6

Question 7

What are common temporary differences and their treatment (items to subtract and add)?

Answer 7

Question 8

Are non-deductible expenses considered permanent or temporary differences?

Answer 8

Question 9

Why do we add non-deductible expenses like fines and penalties to taxable income if they’re already included in net income

Answer 9

Question 10

What Increases Taxable Income Now

Answer 10

Question 11

What Reduces Taxable Income Now

Answer 11

Question 12

What are the steps for calculating taxable income when using the equity method?

Answer 12

Question 13

What are the steps to solve for the reduction in a deferred tax asset when there’s a change in depreciation method?

Answer 13

Question 14

What are the Do’s and Don’ts when calculating total income tax expense with permanent differences and estimated tax payments?

Answer 14

Question 15

What is the Asset and Liability Approach for determining income tax expense, and how does it differ from other methods

Answer 15

Question 16

How do you handle uncertain tax positions (UTPs) when the deduction is expected to be disallowed?

Answer 16

Question 17

What causes Deferred Tax Liabilities (DTLs) and Deferred Tax Assets (DTAs), and what are some common examples

Answer 17

Question 18

How do you determine the recognized tax benefit for uncertain tax positions under GAAP?

Answer 18

Question 19

Calculation of current income tax expense Pt. 1 - Formula

Answer 19

Question 20

Calculation of current income tax expense Pt. 2 - What are the key Do’s and Don’ts when calculating current income tax expense?

Answer 20

Question 21

summary of the rules for solving problems involving Deferred Tax Liabilities (DTL) related to long-term contract revenue recognition

Answer 21

Question 22

How to determine the deferred tax liability when given pretax financial income, taxable income, and specific adjustments (e.g., non-taxable interest, long-term loss accrual, excess depreciation).

Answer 22

Question 23

How to determine the current and deferred tax liabilities given pretax income, penalties, and excess tax depreciation.

Answer 23

Question 24

Income tax worksheet

Answer 24

Question 25

Whats Selions effective tax rate?

Answer 25

Question 26

# Given What rate should you use for calculating interim tax expense

Answer 26

The expected effective **annual** income tax rate for the current year. ETR | Not the quarterly rate, prior year rate, or statutory rate

Question 27

What rate should you use for calculating income tax expense for the year

Answer 27

Statutory | Statutory

Question 28

List of temporary differences and impacts: What to add to net income and what to deduct

Answer 28

Question 29

When calculating a deferred tax liability (DTL) or deferred tax asset (DTA), which tax rate should be used — the current tax rate or the future enacted tax rate?

Answer 29

Always use the future enacted tax rate — the rate that is enacted into law as of the balance sheet date — even if it becomes effective in a future year. This is because deferred tax items reverse in future periods, so they must be measured using the tax rate in effect when the reversal will occur. 👉 Example: If tax depreciation exceeds book depreciation by $40,000 and the enacted future rate is 30%, then: DTL = $40,000 × 30% = $12,000

Question 30

Permanent differences list

Answer 30

Question 31

Deferred tax expense formula

Answer 31

| Temporary differences x future enacted tax rate

Question 32

Income Tax Expense formula

Answer 32

Question 33

How do you determine whether a temporary difference creates a Deferred Tax Liability (DTL) or a Deferred Tax Asset (DTA)?

Answer 33

Question 34

What are common examples of Deferred Tax Liabilities (DTLs) and Deferred Tax Assets (DTAs), and how do their book vs. tax treatments differ?

Answer 34

Question 35

When given a table with uncertain tax probabilities

Answer 35

Question 36

When does an equity method investment create a deferred tax liability (DTL), and how is it calculated?

Answer 36