Question

Grand Corporation pretax book income of $707,500. Tax depreciation
exceeded book depreciation by $565,000. In addition, the company received
272,000 of tax-exempt municipal bond interest. The company's prior-year tax return
showed taxable income of 62,000. Compute the company's current or deferred
income tax expense or benefit.
	Assume
	pre-tax book income	707,500
Less	Excess Tax Depreciation	(565,000)
Less	Tax exempt interest	(272,000)
	net operating loss	(129,500)
	NOL carry-back to Prior year	62,000
		21%
	Current income tax benefit	13020
	Excess Tax Depreciation	(565,000)
	NOL carry-back to Prior year	62,000
	Net increase in Favorable Temp Diff	(503,000)
	Enacted Rate	21%
	Net increase in Deferred Income	(105,630)
	Tax Liability

Answer 1

	pre-tax book income	$     707,500
Less	Excess Tax Depreciation	$    -565,000
Less	Tax exempt interest	$    -272,000
	Net operating loss	$    -129,500
	NOL carry-back to Prior year	$       62,000
	Tax Rate	21%
	Current income tax benefit	$       13,020
	Net operating loss	$     129,500
	Tax Rate	21%
	Deferred income tax expense	$       27,195