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 Liabilities Accrued litigation expense Note payable Total liabilities Stockholders’ Equity Paid-in canital Tax Debit/(Credit) $3005,000300,000(150,000)40,000(21,000)$174,300$−0−(116,000)($116,000)($1000) Book Debit/(Credit) $3005,000300,000(80,000)40,000(15,000)$250,300($27,000)(116,000)($143,000)($1000) Retained earnings (57,300)(106,300) Black, Inc.'s, gross deferred tax assets and liabilities at the beginning of Black's year are as follows: 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. Provide the income tax footnote rate reconciliation for Black, using either dollars or percentages.
Correct Answer:
Verified
Unlock this answer now Get Access to more Verified Answers free of charge
Black, Inc.'s, gross deferred tax assets and liabilities at the beginning of Black's year are as follows: 
Black, Inc.'s, book income before tax is $6,000. Black records two permanent book-tax differences.