TPW, a calendar year taxpayer, sold land with a $570,000 tax basis for $820,000 in February. The purchaser paid $82,000 cash at closing and gave TPW an interest-bearing note for the $738,000 remaining price. In August, TPW received a $59,000 payment from the purchaser consisting of a $36,900 principal payment and a $22,100 interest payment. In the first year after the year of sale, TPW received payments totaling $113,000 from the purchaser. The total consisted of $73,800 principal payments and $39,200 interest payments.
Required:
- For the first year after the year of sale, compute the difference between TPW’s book and tax income resulting from the installment sale method.
- Using a 21 percent tax rate, determine the effect of the difference on the deferred tax asset or liability generated in the year of sale.
It’s that simple.Pay only when you are satisfied.
Get Personalized Homework Help
Improve Your Grades Today
How It Works
1-Send us your Assignment requirements, attach and deadline for submission.
2-You will get a confirmation from us with a price quote.Pay us and be relax.
3-Your Completed task will be e mailed to you before agreed time.
Submit Your Assignment/Essay/Discussion/Term Paper/Final Exam or CaseStudy Detail
Available 24/7!
Send your academic problems,
Get instant Help only at Writerscampus!