Designate by an a If the Item Would Be an Addition

question 22

Short Answer

Designate by an A if the item would be an addition to book income in determining taxable income; designate by an S if the item would be a subtraction from book income in determining taxable income.
-Insurance premium on key-person life insurance.
b. Tax-exempt bond interest income
c. Tax depreciation in excess of book depreciation
d. Fines and bribes
e. Nondeductible portion of meals and entertainment
f. Federal income tax
g. Carryover of a charitable contribution from a prior year
h. Increase in cash value of key-person life insurance
i. Bad debt expense in excess of the addition to bad debt reserves
j. Excess of book depreciation over tax depreciation
k. Expenses related to tax-exempt income
l. Excess capital losses over capital gains

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Definitions:

Noncash Charges

Expenses recorded in accounting but do not involve any actual cash flow, such as depreciation or amortization.

Available-For-Sale Securities

Financial instruments that are not classified as held-to-maturity or trading securities, and are instead intended to be sold for reasons other than temporary declines in value.

Unrealized Gain

The potential profit that exists on paper resulting from an investment that has not yet been sold for cash.

Loss Account

An account that records the expenses that exceed revenues, indicating a negative financial performance over a period.