Question

Park Co.’s 2018 income statement reported $102,605 in income before provisions for income taxes. To compute the provision for federal income taxes, the following 2018 data are provided:

Installment sales to be collected in future years                    $6,728

Income from exempt municipal bonds                                $16,379

Depreciation deducted for financial reporting purposes        $13,667

Depreciation deducted for income tax purposes          $28,361

If the alternative minimum tax provisions are ignored, what amount should Park report as taxable income?

Answer 1

	Particulars			Amount in $
	Income as per Books of Park Co.'s			1,02,605
Add:	Depreciation as per books	Refer Note 1	13,667
Less:	Depreciation as per income tax	Refer Note 1	-28,361	-14,694
Less:	Income from Exempted Municipal Bonds	Refer Note 2		-16,379
Less:	Installment Sales	Refer Note 3		-6,728
	Taxable income			64,804
Note:
1	The depreciation provided as per income tax provisions need to be considered for arriving taxable income
2	Income from municpal bons are not taxable since bonds are exempted bonds
3	Money due on a current receivable account cannot be taxed until collection is actually made, but the sale needs to be reported in the current period.