Question

At december 31, 2025, appaloosa corporation had a deferred tax liability of $25,000. at december 31, 2026, the deferred tax liability is $42,000. the corporation’s 2026 current tax expense is $48,000. what amount should appaloosa report as total 2026 income tax expense?

Total income tax expense for 2026 $:____

Answer 1

The total income tax expense for Appaloosa Corporation for 2026 is calculated by adding the current tax expense ($48,000) and the increase in deferred tax liability ($17,000), which totals $65,000.

Step-by-step explanation:

To calculate the total income tax expense for Appaloosa Corporation for the year 2026, we need to consider both the current tax expense and the change in the deferred tax liability from the previous year. The current tax expense for the year is already given as $48,000.

The change in deferred tax liability can be calculated by finding the difference between the deferred tax liabilities at the end of 2025 and 2026. Since the deferred tax liability increased from $25,000 in 2025 to $42,000 in 2026, the change is $42,000 - $25,000, which equals $17,000. This increase in liability indicates that there will be more taxes to pay in the future and is therefore considered a tax expense for the current year.

Now, we add the current tax expense to the increase in the deferred tax liability to find the total income tax expense for the year 2026:

Current Tax Expense: $48,000
Increase in Deferred Tax Liability: $17,000
Total Income Tax Expense for 2026: $48,000 + $17,000 = $65,000

Therefore, Appaloosa Corporation should report a total income tax expense of $65,000 for the year 2026.