During a year, Southside Metals reported income tax expense of $200,000. The amo

Question

During a year, Southside Metals reported income tax expense of $200,000. The amount of taxes currently payable remained unchanged from the beginning to the end of the year. The deferred tax liability classified as noncurrent that resulted from the use of MACRS for tax purposes and straight-line depreciation for financial reporting purposes, increased from $40,000 at the beginning of the year to $44,000 at the end of the year. How much cash was paid for income taxes during the year?

A) $156,000
B) $160,000
C) $196,000
D) $206,000

Explanation / Answer

The deferred income tax liability increased by $4,000. That means that income tax on the tax return was less than income tax on the financial records by $4,000. Since the amount that was paid was the amount on the tax return, the amount paid was C, $196,000.

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