Which of the Following Results in a Permanent Book/tax Difference

question 100

Multiple Choice

Which of the following results in a permanent book/tax difference for a corporate taxpayer?

• A) Loss realized on a related party sale
• B) Sale of a depreciable asset with a $100,000 book basis and a $33,600 adjusted tax basis
• C) Gain recognized under the installment method
• D) Net capital loss

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Definitions:

Economic Losses

Financial losses incurred due to inefficiencies, decreased demand, or negative external factors affecting the economy.

Economic Profits

The difference between a firm's total revenue and its total costs, including both explicit and implicit costs, indicating the extra income earned over what could have been earned in the next best alternative.

Accounting Profits

The sales revenues minus the expenses of a firm over a designated time period, usually one year. Accounting profits typically make allowances for changes in the firm’s inventories and depreciation of its assets. No allowance is made, however, for the opportunity cost of the equity capital of the firm’s owners, or other implicit costs.

Zero

Zero is a numerical value representing the absence of any quantity or magnitude; it plays a central role in mathematics and economics.