[calicpa]

A firm has pretax income of $19,000, which reflects $1,000 of insurance premiums on a life insurance policy for a key employee. If the tax rate is 30%, income tax expense for the year is $6,000

True

Why do you subtract 1,000 from pretax income to get tax expense, if the insurance premium is non deductible?

BEC - 84, 4/6/13
AUD - 77, 5/28/13
REG - 83, 4/12/14
FAR - 83, 10/3/13

Ethics - 90% 4/24/13

150 unit education requirement met!
Work experience met!

[mrogovitz]

Could you write out the question exactly as it is written in the materials you are pulling it from?

AUD: Attempt 1: 60; Attempt 2: 78
BEC: Attempt 1: 75 (lost credit); Attempt 2: 80
FAR: Attempt 1: 74; Attempt 2: 74; Attempt 3: 78
REG: Attempt 1: 76 (lost credit); Attempt 2: 68; Attempt 3: 80

Finished 11/01/2013!!!

[calicpa]

that is it. Its a true or false question from CPAexcel

BEC - 84, 4/6/13
AUD - 77, 5/28/13
REG - 83, 4/12/14
FAR - 83, 10/3/13

Ethics - 90% 4/24/13

150 unit education requirement met!
Work experience met!

[NYCaccountant]

Life Insurance Premiums in which the corporation is the beneficiary are not tax deductible ever. They create a permanent difference between financial and tax reporting. To calc income tax expense for financial and tax reporting, simply add the $1,000 to both taxable income and pre tax income to adjust for the permanent difference. So both balances will be 20k, and 20,000 * .30=equals tax expense of 6,000.

FAR - 93
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BEC - 84!!!!
AUD - 99!!!!!! CPA exam complete.

[calicpa]

awesome. thanks

BEC - 84, 4/6/13
AUD - 77, 5/28/13
REG - 83, 4/12/14
FAR - 83, 10/3/13

Ethics - 90% 4/24/13

150 unit education requirement met!
Work experience met!

[Author]

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