Harold bought land from jewel for $150,000. harold paid $50,000 cash and gave jewel an 8% note for $100,000. the note was to be paid over a five-year period. when the balance on the note was $80,000, jewel began having financial difficulties. to accelerate her cash inflows, jewel agreed to accept $60,000 cash from harold in final payment of the note principal. a. harold must recognize $20,000 ($80,000 - $60,000) of gross income.
b. harold is not required to recognize gross income, but must reduce his cost basis in the land to $130,000.
c. harold is not required to recognize gross income, since he paid the debt before it was due.
d. jewel must recognize gross income of $20,000 ($80,000 - $60,000) from discharge of the debt.
e. none of these.

Martinez company has the following two temporary differences between its income tax expense and income taxes payable. 2017 2018 2019 pretax financial income $873,000 $866,000 $947,000 (2017' 2018, 2019) excess depreciation expense on tax return (29,400 ) (39,000 ) (9,600 ) (2017' 2018, 2019) excess warranty expense in financial income 20,000 9,900 8,300 (2017' 2018, 2019) taxable income $863,600 $836,900 $945,700(2017' 2018, 2019) the income tax rate for all years is 40%. instructions: a. prepare the journal entry to record income tax expense, deferred income taxes, and income taxes payable for 2017, 2018, and 2019. b. assuming there were no temporary differences prior to 2016, indicate how deferred taxes will be reported on the 2016 balance sheet. button's warranty is for 12 months. c. prepare the income tax expense section of the income statement for 2017, beginning with the line, "pretax financial income."