Lyons Company deducts insurance expense of $210,000 for tax purposes in 2018, but the expense is not yet recognized for accounting purposes. In 2019, 2020, and 2021, no insurance expense will be deducted for tax purposes, but $70,000 of insurance expense will be reported for accounting purposes in each of these years. Lyons Company has a tax rate of 40% and income taxes payable of $180,000 at the end of 2018. There were no deferred taxes at the beginning of 2018. Reference: Ref 19-5 What is the amount of income tax expense for 2018? A. $180,000 B. $210,000 C. $264,000 D. $252,000

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Business

Mariana Townsend

23 February, 18:26

Lyons Company deducts insurance expense of $210,000 for tax purposes in 2018, but the expense is not yet recognized for accounting purposes. In 2019, 2020, and 2021, no insurance expense will be deducted for tax purposes, but $70,000 of insurance expense will be reported for accounting purposes in each of these years. Lyons Company has a tax rate of 40% and income taxes payable of $180,000 at the end of 2018. There were no deferred taxes at the beginning of 2018. Reference: Ref 19-5 What is the amount of income tax expense for 2018? A. $180,000 B. $210,000 C. $264,000 D. $252,000

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Nicole Flynn · Answer 1

The total income tax expense for 2019 = 152.000. Is not available in the options given by the exercise.

Explanation:

Tax on insurance expense deductible for accounting purposes in 2019 = 70000*40%=28.000

Income tax expense for 2019 = 180.000-28.000=152.000