1. If a corporation has no operations outside the U.S., its GAAP book and taxable income are identical.
a. True
b. False
2. Only U.S. corporations are included in a combined GAAP financial statement.
a. True
b. False
3. A partnership owned at least 80% by a corporation is included in a consolidated group's U.S. income tax return.
a. True
b. False
4. "Permanent differences" include items that appear in the Federal income tax return as income or deduction, and in the GAAP financial statements as revenue or expense, but in different reporting periods.
a. True
b. False
5. A deferred tax liability represents a current tax liability associated with income or expense to be reported in future year GAAP financial statements.
a. True
b. False
6. The operations of 80% or more owned domestic subsidiaries can be included in the parent corporation's consolidated tax return, if a proper election is made.
a. True
b. False
7. "Temporary differences" are book-tax differences that appear in both the GAAP financial statements and the Federal income tax return, but not in the same reporting period.
a. True
b. False
8. The current tax expense reported on the GAAP financial statements generally represents the taxes actually payable to domestic or foreign governmental authorities.
a. True
b. False
9. A deferred tax asset is the expected future tax benefit (savings) associated with income reported in the current year GAAP financial statements.
a. True
b. False
10. The income tax footnote to the GAAP financial statements includes a reconciliation of a corporation's hypothetical tax on book income to its book tax expense as if it were taxed in full at the applicable U.S. income tax rates.
a. True
b. False