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LA vs Boston. Which city pays higher? Big4 tax
Can someone explain 704(b) in simple terms?
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First of all I am not an GAAP expert however this is how I would look at it:
1) Tax expense DR 100
Tax liability CR 100
2) Tax liability DR 100
Cash CR 100
First entry accrues the liability and second entry records payment. At the end of the day tax liability has no balance and DR and CR are same on each entry. If you net this two entry you have only one entry:
Tax Expense DR 100
Cash CR 100
Debit tax liability and credit cash for a payment
I am not in a position to say if you are or not
I can’t believe you’re asking this either as a Senior Tax Consultant
He or she is asking because they have received conflicting advice.
Everyone is wrong here lol.
The correct entry is
-Prepaid Tax (Debit)
-Cash (Credit)
When the provision is booked
-DR Tax Expense
-CR Prepaid
Anything not paid gets credited to income taxes payable. Anything not paid and deferred for tax is deferred tax liability. Opposite for deferred tax asset.
They should have already recorded a liability. So it is not a prepaid, it is a reduction of the liability that they already recorded.
Of course if they messed up and didn’t record the liability, they should do so.
One guy says he can’t believe your asking yet nobody knows lol
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