Problem:
At the end of its third year of operations, December 31, 2014, Delilah Corp. is reporting pre-tax book income of $223,000. The following items are relevant to Delilah’s deferred tax computations:
1. A $55,000 unrealized holding gain on its trading securities that is not recognized for tax purposes until it sells the securities.
2. Bad debt expense of $24,000 was recorded on its accounts receivable, although during 2014 no actual write-offs took place.
3. During 2014, Delilah received $19,000 cash from one of its customers. The payment received relates to a product that will be completed and delivered to the customer in late January 2015, at which time it will be taxable. Delilah is subject to a 40% corporate tax rate.
Required:
1. Determine Delilah Corp.’s taxable income and taxes payable for 2014.
2. Determine the changes in Delilah Corp.’s deferred tax amounts for 2014.
3. Calculate tax expense for Delilah Corp. for 2014