Sparrow Corporation reported pretax book income of $5,025,000. During the current year, the reserve for warranties increased by $301,500. In addition, tax depreciation exceeded book depreciation by $402,000. Finally, Sparrow received $50,500 of tax-exempt interest from municipal bonds. Compute Sparrow's current income tax expense or benefit.

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The Answer of Sparrow Corporation reported pretax book income of $5,025,000. During the current year, the reserve for warranties increased by $301,500. In addition, tax depreciation exceeded book depreciation by $402,000. Finally, Sparrow received $50,500 of tax-exempt interest from municipal bonds. Compute Sparrow's current income tax expense or benefit.

Sparrow Corporation Reported Pretax Book Income of $5,025,000