Amelia, Inc Amelia, Inc Amelia, Inc

Amelia, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year. Assume a 34% corporate tax rate and no valuation allowance. $\begin{array} { l r r }& \text {Tax Debit/(Credit)}& \text { Book Debit/(Credit)}\\ \text {Assets}\\ \text { Cash } & \$ 1,200 & \$ 1,200 \\ \text { Accounts Receivable } & 20,000 & 20,000 \\ \text { Buil dings } & 1,200,000 & 1,200,000 \\ \text { Acc. Depreciation } & ( 600,000 ) & ( 320,000 ) \\ \text { Furniture \& Fixtures } & 160,000 & 160,000 \\ \text { Acc. Depreciation } & { ( 84,000 ) } & \underline { ( 60,000 ) } \\ \text { Total Assets } & \underline { \mathbf { \$697,200 } }& \underline { \mathbf { \$1,001,200}}\\\\\text { Liabilities }\\\text { Accrued Vacation Pay } & \$-0- & (\$ 108,000) \\\text { Note Payable } & \underline{(464,000)} & \underline{(464,000)} \\\text { Total Liabilities } & \underline{(\$ 464,000)} & \underline{(\$ 572,000)}\\\\\text { Stockholders' Equity }\\\text { Paid in Capital } & (\$ 4,000) & (\$ 4,000) \\\text { Retained Eamings } & \underline{(229,200)} & \underline{(425,200)} \\\text { Total Liabilities and } & \\\text { Stockhol ders' Equity } &\underline{(\$ 697,200)} & \underline{(\$ 1,001,200)} \end{array}$


Amelia, Inc.'s, gross deferred tax assets and liabilities at the beginning of Amelia's year are listed below. $\begin{array}{lr}&\text { Beginning of Year }\\\text { Accrued Vacation Pay } & \$ 84,000 \\\text { Subtotal } & \$ 84,000 \\\text { Applicable Tax Rate } & \times 34 \% \\\text { Gross Deferred Tax Asset } & \mathbf{\$ 2 8 , 5 6 0}\\\\\text { Buil ding - Acc. Depreciation } & (\$ 244,000) \\\text { Furniture \& fixtures - Acc. Depreciation } & (12,800) \\\text { Subtotal } & (\$ 256,800) \\\text { Applicable tax rate } & \times \quad 34 \% \\\text { Gross deferred tax liability } & \mathbf{(\$ 8 7 , 3 1 2 )}\end{array}$ Amelia, Inc.'s, book income before tax is $25,200. Amelia records two permanent book-tax differences. It earned $1,000 in tax-exempt municipal bond interest and $1,840 in nondeductible meals and entertainment expense. Calculate Amelia's current tax expense.