Zeon, a large company has a regular taxable income of $350,000. The company is considering adding some automatic equipment to its production facilities. An investment of $120,000 will produce an initial annual benefit of $89,000 however the benefits are expected to decline $3000 per year. The automatic equipment is considered a MARCS 5-year property class. The annual operating expenses are $15,000. Compute:
1. The incremental annual taxable income for years 1 and 2
2. The incremental annual income tax for years 1 and 2