The following information relates to Interstate Trucking for itsfirst year of operations (data in millions ofdollars):
Pretax accounting income: $150
Pretax accounting income included:
Overweight fines (not deductible for tax purposes) 5
Depreciation expense 70
Depreciation on the tax return using MACRS: 110
The applicable tax rate is 40%. There are no other temporary ornontemporary differences.
Inter state's taxable income ($ in millions) is:
1) $40.
2) $25
3) $110.
4) $115.