Marlin Corporation reported pretax book income of $1,000,000. During the current year, the net reserve for warranties increased by $25,000. In addition, book depreciation exceeded tax depreciation by $100,000. Finally, Marlin subtracted a dividends received deduction of $15,000 in computing its current-year taxable income. Marlin's current income tax expense or benefit would be:

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The taxable income is calculated by adjusting the pretax book income for temporary and permanent differences. The increase in the warranty reserve ($25,000) is added back, and the excess book depreciation over tax depreciation ($100,000) is subtracted. The dividends received deduction ($15,000) is also subtracted. The adjusted taxable income is $1,000,000 + $25,000 - $100,000 - $15,000 = $910,000. The tax expense is then calculated as $910,000 * 21% = $191,100. Adding back the tax effect of the dividends received deduction ($15,000 * 21% = $3,150), the total tax expense is $191,100 + $3,150 = $233,100.

Marlin Corporation Reported Pretax Book Income of $1,000,000