Black, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year. Assume a 21% corporate tax rate and no valuation allowance. Assets Cash Accounts receivable Buildings Accumulated depreciation Furniture & fixtures Accumulated depreciation Total Assets Tax Debit/(Credit)$3005,000300,000(150,000)40,000(21,000)$174,300Book Debit/(Credit) 3005,000300,000(80,000)40,000(15,000)$250,300
Liabilities Accrued litigation expense Note payable Total liabilities $−0−(116,000)($116,000)($27,000)(116,000)($143,000)
Paid-in capital Retained earnings Total liabilities and stockholders’ equity ($1,000)(57,300)($174,300)($1,000)(106,300)($250,300) Black, Inc.'s, gross deferred tax assets and liabilities at the beginning of Black's year are listed below. Accrued litigation expense Subtotal Applicable tax rate Gross deferred tax asset Building - Accumulated depreciation Furniture & fixtures - Accumulated depreciation Subtotal Applicable tax rate Gross deferred tax liability Beginning of Year $20,000$20,000×21%$4,200($61,000)(3,000)($64,000)×21%($13,440) Black, Inc.'s, book income before tax is $6,000. Black records two permanent book-tax differences. It earned $250 in tax-exempt municipal bond interest and incurred $500 in nondeductible business meals expense. Determine the change in Black's deferred tax liabilities for the current year.
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