RoofCo reports total book income before taxes of $20 million and a total tax expense of $8 million. FloorCo reports book income before taxes of $30 million and a total tax expense of $12 million. The companies€™ breakdown between current and deferred tax expense (benefit) is as follows.

RoofCo€™s deferred tax benefit is from a deferred tax asset created because of differences in book and tax depreciation methods for equipment. FloorCo€™s deferred tax benefit is created by the expected future use of an NOL. Compare and contrast these two companies€™ effective tax rates. How are they similar? How are they different?

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RoofCo Current tax expense Deferred tax benefit Total tax expense $10.0 (2.0) 8.0 Foorko $13.0 $12.0