Accounting Federal Taxation

Relix, Inc., is a domestic corporation with the following balance sheet for book and tax purposes at the end of the year before recording any net deferred tax asset or net deferred tax liability. Tax Book Debit/Credit) Debit/(Credit) Assets Cash $500 $500 Accounts receivable 8,000 8,000 Buildings 750,000 750,000 Accumulated depreciation (450,000) (380,000) Furniture and fixtures 70,000 70,000 Accumulated depreciation (46,000) (38,000) Total assets $332,500 $410,500 Liabilities Accrued litigation expense $0 ($50,000) Note payable (78,000) (78,000) Total liabilities ($78,000) ($128,000) Stockholders' Equity Paid-in capital ($10,000) (244,500) ($10,000) (272,500) Retained earnings Total liabilities and stockholders' equity ($332,500) ($410,500) The partial beginning of the year tax and book balance sheet information is provided below. Tax Debit/ (Credit) Book Debit/ (Credit) Assets Accumulated depreciation-Building ($360,000) ($417,000) (35,200) Accumulated depreciation-Furniture & fixtures (31,000) Liabilities Accrued litigation expense $0 ($34,000) In addition to the temporary differences above, Relix, Inc., reported two permanent differences between book and taxable income. It earned $2,375 in tax-exempt municipal bond interest, and it incurred $780 in nondeductible business meals expense. Relix's book income before tax is $4,800. Assume a 21% Federal corporate tax rate and no valuation allowance. With this additional information, calculate Relix's current tax expense. Compute Relix's current tax expense. If required, round your answers to the nearest dollar. Pretax book income $4,800 Book-tax differences Permanent items Less: tax-exempt income 2,375 Add: nondeductible business meals 780 Temporary Differences Less: excess depreciation-Building 13,000 Less: excess depreciation - Furniture and fixtures 3,800 Add: accrued litigation expenses 16,000 Taxable income $ 2,405 Current tax expense 5,880 X