Marlin Corporation reported pretax book income of $1,016,000. During the current year, the net reserve for warranties increased by $28,200. In addition, book depreciation exceeded tax depreciation by $101,600. Finally, Marlin subtracted a dividends received deduction of $16,600 in computing its current-year taxable income. Marlin's current income tax expense or benefit would be:

Question

Quizplus · Accepted Answer

Starting with pretax book income of $1,016,000:
- Add net reserve for warranties increase: +$28,200
- Add book depreciation in excess of tax depreciation: +$101,600
- Subtract dividends received deduction: -$16,600
= Taxable income of $1,129,200

Using the corporate tax rate of 21%:
$1,129,200 x 0.21 = $237,132

Therefore, Marlin's current income tax expense would be $237,132 tax expense.

Marlin Corporation Reported Pretax Book Income of $1,016,000