[poofy85]

I am trying to compare my accounting income and taxable income. I need to figure out my Future Income Tax Expense/Future Income tax Liability. I have only been given, Income before tax, Depreciation Expense, Capital Cost Allowance, Dividend Income, and Expenses not deductible for Tax purposes. I was not given any UCC or Net Book Value. How am I supposed to figure out my FIT Expense/Liability? Meaning.. how do I figure out the temporary differences?

[morgaine300]

I don't know what UCC is. I'm either not familiar with whatever it is, or just never use that abbreviation and it's not occurring to me.

You have to look at how each item would affect taxable income relative to what it did for book income.

For instance, you subtract out depreciation to get to book income. You also would have used some GAAP method (I assume). And the tax method is going to be a different number. So let's say the book was $10,000 and tax is $12,000. You can do this two ways. You have $2000 more deductible for tax, so you can subtract $2000 off book income. Or, you can add the $10,000 back in to get rid of the expense, and then subtract $12,000 as a "replacement" expense.

You proceed in this manner with each item. Now, I can tell you how it's done, but I'm not a tax expert (especially for corporations!) so I don't know how all of the items affect taxes. I'm not sure what the capital cost allowance is. And dividend income has some sort of different bracket used for corporations than it does individual. So I can't answer those specific items -- but that hopefully helps give an idea how to go about solving it.