McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

Exercise 4

Burcham Corporation reported pre-tax book income of $600,000.Tax depreciation exceeded book depreciation by $400,000.In addition, the Company received $300,000 of tax-exempt municipal bond interest.The Company's prior year tax return showed taxable income of $50,000.Compute the Company's book equivalent of taxable income.Use this number to compute the Company's total income tax provision or benefit, assuming a tax rate of 34%.