Problem
Relix, Inc., is a domestic corporation with the following temporary timing differences for the current year.
• The building depreciation for tax purposes exceeds book depreciation by $13,000.
• The furniture and fixtures depreciation for tax purposes exceeds book depreciation by $3,800.
• The accrued litigation expenses in the amount of $16,000 are deductible for book purposes but not yet deductible for tax.
The book-tax basis differences for the deferred assets and liabilities are listed below.
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Beginning of Year
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Current-Year Difference
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End of Year
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Gross deferred tax asset
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$11,560
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$5,440
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$17,000
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Gross deferred tax liability
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($20,808)
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($5,712)
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($26,520)
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In addition to the temporary differences above, Relix reported two permanent differences between book and taxable income. It earned $2,375 in tax-exempt municipal bond interest, and it incurred $780 in nondeductible meals and entertainment expense. Relix's book income before tax is $4,800. Assume a 34% corporate tax rate and no valuation allowance.
Compute Relix's total provision for income tax reported in its financial statements, and determine its book net income after tax.
If required, round your answers to the nearest dollar.
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Book net income before tax
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$4,800
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Provision for income tax expense
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Net income after tax
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$
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