Business, 05.02.2021 22:00 mercedesamatap21hx0

What book–tax differences in year 1 and year 2 associated with its capital gains and losses would DEF Inc. report in the following alternative scenarios? Identify each book–tax difference as favorable or unfavorable and as permanent or temporary. a. In year 1, DEF recognized a loss of 55,000 on land that it had held for investment In year 1, it also recognized a $30,000 gain on equipment it had purchased a few years ago. The equipment sold for $50,000 and had an adjusted basis of $20,000. DEF had deducted $40,000 of depreciation on the equipment. In year 2, DEF recognized a capital loss of $2,000.

b. In year 1, DEF recognized a loss of $15,000 on land that it had held for investment. DEF also recognized a $20,000 gain on equipment it had purchased a few years ago. The equipment sold for $50,000 and had an adjusted basis of $30,000 DEF had deducted $15,000 of tax depreciation on the equipment.

Book-tax Difference Favorable or Unfavorable Temporary or Permanent
Year 1
Year 2

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What book–tax differences in year 1 and year 2 associated with its capital gains and losses would DE...

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