For Mary Lou and Ernie, the assets and liabilities and the effective income tax rates at December 31, 2008, follow:
|
Accounts
|
|
TaxBases
|
|
EstimatedCurrent Value
|
Excess of Estimated Current Values over Tax Bases
|
|
EffectiveIncomeTaxRates
|
|
Amount ofEstimatedIncome Taxes
|
|
Cash
|
|
$ 20,000
|
|
$ 20,000
|
$ -
|
|
-
|
|
|
|
Marketable securities
|
|
80,000
|
|
100,000
|
20,000
|
|
28%
|
|
|
|
Options
|
|
0
|
|
30,000
|
30,000
|
|
28%
|
|
|
|
Residence
|
|
100,000
|
|
150,000
|
50,000
|
|
28%
|
|
|
|
Royalties
|
|
0
|
|
20,000
|
20,000
|
|
28%
|
|
|
|
Furnishings
|
|
40,000
|
|
20,000
|
(20,000)
|
|
-
|
|
|
|
Auto
|
|
20,000
|
|
15,000
|
(5,000)
|
|
-
|
|
|
|
Mortgage
|
|
(70,000)
|
|
(70,000)
|
-
|
|
-
|
|
|
|
Auto loan
|
|
(10,000)
|
|
(10,000)
|
-
|
|
-
|
|
|
Required:
a. Compute the estimated tax liability on the differences between the estimated current value of the assets and liabilities and their tax bases.
b. Present a statement of financial condition for Mary Lou and Ernie at December 31, 2008.
c. Comment on the statement of financial condition.