Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. hi, i just need help with part c. present value of

Hi, I just need help with part C. Present value of the tax on the...

50.1K

Verified Solution

Question

Accounting

Hi, I just need help with part C. Present value of the tax on the sale of the land, as deferred for 5 years is $___. Therefore, the net tax benefit to the group as a result of the deferral would be $___. (answers 12,328.50 and 2671.50 are also incorrect.)

imageimage

B.I.G. Corporation sold a plot of undeveloped land to SubCo this year for $100,000. B.I.G. had acquired the land several years ago for $40,000. The consolidated return also reflects the operating results of the parties: B.I.G. generated $130,000 income from operations (exclusive of the sale of the land), and SubCo produced a $20,000 operating loss. c. Using a 25% combined state and Federal income tax rate compute the time-value-of-money benefit to the group of deferring the gain on the sale of the land. The B.I.G. group uses a 4% after-tax internal rate of return for purposes of this analysis. The present value factor at 4% for 5 years is 0.8219. Round your answers to the nearest dollar. Present value of the tax on the sale of the land, as deferred for 5 years is $ X. Therefore, the net tax benefit to the group as a result of the deferral would be $ Feedback Check My Work Incorrect

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students