Question

IRS regulations govern the computation of gross profit for GAAP. computation of net income for GAAP. computation of net income for the SEC. computation of net income for tax purposes.

Answer 1

IRS regulations oversee the computation of net income for tax purposes, which is used to determine a corporation's tax liabilities. Taxable income is calculated by subtracting deductions and exemptions from the adjusted gross income, and then corporate tax brackets apply to the resulting figure.

Step-by-step explanation:

The IRS regulations primarily govern the computation of net income for tax purposes. When it comes to corporate taxes, companies must compute their taxable income, which is generally their financial statement income adjusted for tax purposes. The taxable income formula for both individuals and corporations is: taxable income = adjusted gross income - (deductions and exemptions). Companies face various corporate tax brackets, and the amount of tax they pay is based on this formula, taking into account any differences that may exist between book income and taxable income due to temporary and permanent differences as dictated by tax laws. While the SEC regulates the reporting of net income for publicly traded companies, the computation of taxable income is influenced by tax laws and IRS regulations rather than GAAP or SEC rules.

Answer 2

The correct answer is letter "D": computation of net income for tax purposes.

Step-by-step explanation:

The Internal Revenue Service (IRS) is the federal agency in charge of collecting citizens' and companies' taxes in the U.S. The IRS was founded in 1862 and since then it has been in charge of setting and enforcing the regulations on paying taxes. Those rules are calculated based on individuals' and organizations' net income but deductions are offered to promote them meet their liabilities.