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(1 point). For the following scenario, determine whether the related book-tax difference (if any) is temporary or permanent. Ramco Tooling purchased new equipment on January 1, Year 1 for $97,500. In Year 1, Ramco took $27,000 in Sec. 179 expense on the equipment and $15,000 in bonus depreciation on the equipment. In addition, it took $21,000 in regular MACRS depreciation on the equipment in Year 1. For book purposes, Ramco estimates the useful life of the equipment is 10 years and uses straight-line depreciation.

(4 points) Total depreciation – A catering business purchased a light truck on April 5, 2023 to deliver breakfast menu items to local hotel restaurants. The business paid $35,000 for the truck. Determine the total depreciation amount for 2024 assuming the taxpayer opted out of Sec. 179 and bonus (if available) in the year of purchase. In addition, assume all taxpayers use a calendar year tax period and that the property mentioned was the only property purchased in the year of acquisition. Use the appropriate depreciation table from your note sheet/textbook where necessary.

(4 points) Gemini Auto Repair is a calendar year taxpayer. The repair shop purchased a light weight truck on March 15, 2023 for $39,000 that it used to drive customers back and forth to their cars while the shop worked on their cars (i.e. for business purposes). On August 21, 2024, the repair shop sold the truck for $34,000. Assume that the lightweight truck was the only asset Gemini purchased in 2023. Gemini Auto Repair opted out of Sec. 179 and bonus depreciation for 2023. Do not use any MACRS tables to calculate regular depreciation, instead just assume that the depreciation deductions Gemini actually took for the truck for 2023 and 2024 were $8,100 and $9,500, respectively. What was the total amount of gain (or loss) for Gemini in 2023 on the sale of the truck?

(4 points) A new vintage clothing store began operating within 2024. It is organized as a corporation, operates over a calendar year tax period, and opened its doors (began business) on April 1, 2024. Assume the total amount of start-up costs for the company was $25,000 and for organizational expenditures was $20,000. What amount of these organizational expenditures can be immediately expensed in 2024? Of the portion of these organizational expenditures that could not be immediately expensed, how much amortization expense can the business claim for 2024?

(4 points) Assume that estimated taxable income after adjusting for permanent and temporary differences is $128,000. What is the current income tax expense applying the appropriate current tax rate for corporations in Year 1 given the current corporate tax rate is a flat 21%?

(1 point) For the following scenario, determine the dollar amount of the book-tax difference (if any) written as a positive number in 2015. On January 1, 2015, Landmark Corporation offered its CFO 2,800 NQOs options to purchase the company’s at the same price offered by the public market on that day, $8/share, at any date in the future after the CFO vests. The CFO will vest 25% of its options in 2015, 25% in 2016, and vest the remaining portion in 2017. The CFO promptly exercised all of his options on December 31, 2017 when he was 100% vested and turned around and sold all the shares for $15/share on the public market. Assume that on the grant date, Landmark Corporation estimated the value of the options would be $7/share. The company uses a calendar year tax period.

(1 point) Cost Recovery Methods – What cost recovery method (if any) should be used for costs from the purchase of a work desktop computer?

(1 point). For the following scenario, determine whether the related book-tax difference (if any) is favorable or unfavorable. Ramco Tooling purchased new equipment on January 1, Year 1 for $97,500. In Year 1, Ramco took $27,000 in Sec. 179 expense on the equipment and $15,000 in bonus depreciation on the equipment. In addition, it took $21,000 in regular MACRS depreciation on the equipment in Year 1. For book purposes, Ramco estimates the useful life of the equipment is 10 years and uses straight-line depreciation.

(4 points) Regal Corporation assessed that $280,500 of its research tax credit on its current year tax return was uncertain, but that it was more likely than not to be sustained on audit. Management at Regal determined the following assessment of the company’s potential tax benefit from the credit and its probability of occurring. Potential Estimated Benefit Individual Probability of Occurring (%) Cumulative Probability of Occurring (%) $280,500 21% 21% 265,000 13 34 175,000 19 53 121,000  25 78 0 22 100   Based on the above scenario, what is the portion of the $325,000 credit that will be unrecognized (require a liability) for uncertain tax positions?

(1 point). For the following scenario, determine the dollar amount of book-tax difference (if any) written as a positive number. Ramco Tooling purchased new equipment on January 1, Year 1 for $97,500. In Year 1, Ramco took $27,000 in Sec. 179 expense on the equipment and $15,000 in bonus depreciation on the equipment. In addition, it took $21,000 in regular MACRS depreciation on the equipment in Year 1. For book purposes, Ramco estimates the useful life of the equipment is 10 years and uses straight-line depreciation.