Provide the journal entry necessary to record tax payment

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Question - Jazz, Inc., claimed $100,000 of rehabilitation credits on its 2021 tax return. There was sufficient tax authority to take the credits. However, due to uncertainty regarding the eligibility of some of the expenditures, Jazz only recognized $70,000 of the benefits in its 2021 financial statements. When its tax return was audited in 2022, the IRS challenged the eligibility of some of the expenditures and Jazz agreed to pay $20,000 additional tax to settle the dispute.

a. By how much does the settlement impact Jazz's 2022 book tax expense?

b. Provide the journal entry necessary to record the 2022 tax payment.

Reference no: EM133145861

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