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Question

for bob and jane, the assets and liabilities and the effective income tax rates are as follows at december 31, 2012 .

excess

of estimated

amount of

current

effective

estimated

estimate of

values over

income

income

account

tax bases

current value

tax bases

tax rates

taxes

cash

$30,000

$30,000

marketable securities

50,000

60,000

10,000

20%

options

-0-

20,000

20,000

20%

residence

120,000

160,000

40,000

10%

royalties

-0-

10,000

10,000

20%

furnishings

30,000

25,000

(5,000)

auto

10,000

8,000

(2,000)

mortgage payable

(60,000)

(60,000)

auto loan

(4,000)

(4,000)

required:

a.

compute the estimated tax liability on the differences between the estimated current value of the assets and liabilities and their tax bases.

b.

present a statement of financial condition for bob and jane at december 31, 2012 .

Answer

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