Black, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the
end of the year. Assume a 35% corporate tax rate and no valuation allowance.

Black, Inc.'s, gross deferred tax assets and liabilities at the beginning of Black's year are listed below.

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 it incurred $500 in nondeductible meals
and entertainment expense. Determine the net deferred tax asset or net deferred tax liability at year end.

Question

Black, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the
end of the year. Assume a 35% corporate tax rate and no valuation allowance.
​
  
​

Black, Inc.'s, gross deferred tax assets and liabilities at the beginning of Black's year are listed below.
​
  
​
  
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 it incurred $500 in nondeductible meals
and entertainment expense. Determine the net deferred tax asset or net deferred tax liability at year end.

Quizplus · Accepted Answer

The Answer of Black, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the
end of the year. Assume a 35% corporate tax rate and no valuation allowance.
​
  
​

Black, Inc.'s, gross deferred tax assets and liabilities at the beginning of Black's year are listed below.
​
  
​
  
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 it incurred $500 in nondeductible meals
and entertainment expense. Determine the net deferred tax asset or net deferred tax liability at year end.