1. Prepare a table that reconciles the amount of statutory tax dues to taxes paid, for each of the three years. Specifically identify: permanent & temporary differences; tax expense charged to income; taxes due under statutory rate; and taxes paid.

2.By how much did the company over or under pay its taxes in each of the three years based on differential accounting rules applied for its GAAP and Tax accounting?

3.Did the company end up (a) increasing deferred tax liabilities/decreasing deferred tax assets or (b) decreasing deferred tax liabilities/increasing deferred tax assets during each of the three years? By what amounts?

4. From the data, what is the best estimation of the effective tax rate for the company that can be used for in the projection as of 2007. Show steps of how you arrive the number.

Excerpts from Company Michaels tax note disclosures are presented below. Use this information to answer - the following questions. Tax Provision and Deferrals ($ Millions) 2007 2006 2005 Earning Before Tax 1071 827 634 Tax Provision Current 266 116 200 Deferral 130 112 (61) Total 396 228 139 Effective Tax Rate Statutory Tax Rate Foreign Tax Differential Tax Credit Sale of Business American Jobs Act Valuation Allowance Change 35.00% 3.25% -0.45% 35.00% 2.66% -1.23% -8.92% 35.00% 3.87% -0.65% -0.81% 36.99% 0.08% 27.59% -25.00% 8.70% 21.92% Excerpts from Company Michaels tax note disclosures are presented below. Use this information to answer - the following questions. Tax Provision and Deferrals ($ Millions) 2007 2006 2005 Earning Before Tax 1071 827 634 Tax Provision Current 266 116 200 Deferral 130 112 (61) Total 396 228 139 Effective Tax Rate Statutory Tax Rate Foreign Tax Differential Tax Credit Sale of Business American Jobs Act Valuation Allowance Change 35.00% 3.25% -0.45% 35.00% 2.66% -1.23% -8.92% 35.00% 3.87% -0.65% -0.81% 36.99% 0.08% 27.59% -25.00% 8.70% 21.92%