DETERMINATION OF CORPORATE TAX. Butters, Inc., sells furniture to retail customers. For 19x8 Butters has the following data:

REQUIRED:
1. Compute federal income tax due for Butters for 19x8.
2. Determine income tax expense for Butters’ income statement. The only temporary difference is the depreciation difference noted above.

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Sales revenue Cost of goods sold Operating expenses* Dividend income Interest expense Interest revenue, corporate bonds Short-term capital gains Long-term capital gains $4,300,000 2,540,000 1,106,000 20,000 70,000 15,000 10,000 37,000 *Includes MACRS depreciation expense of $220,000. Depreciation expense on the income state- ment is $170,000.