1 answer

34. The Light Record Corporation has been on the calendar year since its inception five years...

Question:

34. The Light Record Corporation has been on the calendar year since its inception five years ago. It wishes to change to an
34. The Light Record Corporation has been on the calendar year since its inception five years ago. It wishes to change to an April 30. natural business year. For 2019, the calendar year of proposed change, Light had a taxable income of $200,000, of which $50,000 was earned from January through April. a. What must Light Corporation do to obtain the change in period? When must it do it? b. What is the tax liability for the short year?

Answers

a) The Light Company can Opt For change In period of taxable, he must follow cut of procedures so he can segregate the income between two periods. He must record all the transactions between jan to april and calculate depreciation for the complete year . The Income earned during this period is chargeable to tax under the the FY 2019-20

b) The Tax liability for the year is to be calculated on the income for the period Between January to April I.e) on $50,000. The Tax should be Calculated as per Applicable Tax Rate prescribed.

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