Burcham Corporation reported pretax book income of $825,000. Tax depreciation ex

Question

Burcham Corporation reported pretax book income of $825,000. Tax depreciation exceeded book depreciation by $560,000. In addition, the company received $315,000 of tax-exempt municipal bond interest. The company's prior-year tax return showed taxable income of $25,000. Compute the company's book equivalent of taxable income. Use this number to compute the company's total income tax provision or benefit, assuming a tax rate of 34 percent. Book equivalent of taxable income Total income tax provision or benefit

Explanation / Answer

Pre-tax book income 825000 Tax-exempt interest -315000 Book equivalent of taxable income 510000 Tax rate 34% Total income tax provision 173400

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