Solution-Calculate Duck net income from the concert for tax

Calculate Duck net income from the concert for tax purpose

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Reference no: EM132656946

Problem - Critical Thinking Duck, an accrual basis corporation, sponsored a rock concert on December 29, 2019. Gross receipts were $300,000. The following expenses were incurred and paid as indicated:

Expense		Payment Date
Rental of coliseum	$25,000	December 21, 2019
Food	30,000	December 30, 2019
Souvenirs	60,000	December 30, 2019
Performers	100,000	January 5, 2020
Cleaning of coliseum	10,000	February 1, 2020

Because the coliseum was not scheduled to be used again until January 15, the company with which Duck had contracted did not perform the cleanup until January 8-10, 2020.

Required -

a. Calculate Duck's net income from the concert for tax purposes for 2019.

b. Using the present value tables in Appendix G, what is the true cost to Duck if it had to defer the $100,000 deduction for the performers until 2020? Assume a 5% discount rate and a 21% marginal tax rate in 2019 and 2020.

Reference no: EM132656946

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Calculate Duck net income from the concert for tax purpose

Reference no: EM132656946

Reference no: EM132656946

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