Analyzing and Interpreting Income Tax Footnote Bayerische Motoren Werke AG, commonly referred to as BMW, is a German multinational company that produces automobiles and motorcycles. The company was founded in 1916 as a manufacturer of aircraft engines, which it produced from 1917 until 1918 and again from 1933 to 1945. BMW includes the following footnotes in its 2018 annual report.

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Analyzing and Interpreting Income Tax Footnote Bayerische Motoren Werke AG, commonly referred to as BMW, is a German multinational company that produces automobiles and motorcycles. The company was founded in 1916 as a manufacturer of aircraft engines, which it produced from 1917 until 1918 and again from 1933 to 1945. BMW includes the following footnotes in its 2018 annual report. Taxes on income of the BMW Group comprise the following: 2018 2017 2,220 2,558 355 -558 in million Current tax expense Deferred tax expense (+)/deferred tax income (-) thereof relating to temporary differences thereof relating to tax loss carryforwards and tax credits Income taxes 641 -502 -286 -56 2,575 2,000 The difference between the expected tax expense based on the underlying tax rate for Germany and actual tax expense is explained in the following reconciliation: in million 2018 2017 10,011 10,889 30.8% 30.7% 3,083 3,343 -1026 -359 Profit before tax Tax rate applicable in Germany Expected tax expense Variances due to different tax rates Tax increases (+)/tax reductions (-) as a result of nondeductible expenses and tax-exempt income Tax expense (+)/benefits (-) for prior years Other variances 141 58 -16 -104 -214 -205 2,635 2,066 Actual tax expense The allocation of deferred tax assets and liabilities to balance sheet line items at 31 December is shown in the following table: Deferred Tax Deferred Tax in million Assets 2018 Liabilities 2018 Intangible assets 22 3,077 Property, plant and equipment 171 359 Leased products 487 5,210 Other investments 3 20 Sundry other assets 1,185 3,254 Tax loss carryforwards and capital losses 891 Provisions 5,323 29 Liabilities 2,570 620 Eliminations 3,180 981 13,832 13,550 Valuation allowances on tax loss carryforwards and capital losses -508 0 Netting within tax jurisdictions -11,744 -11,744 Deferred taxes 1,580 1,806 - 226 Required a. What income tax expense does BMW report in its 2018 income statement? 2,575 million How much of this expense was paid during the year or is currently payable? 2,220 million b. Determine the company's effective tax rate. Note: Round your percentage to one decimal place (for example, enter 6.7% for 6.6655%). 26.3 % C. What is the company's marginal (statutory) tax rate? Note: Round your percentage to one decimal place (for example, enter 6.7% for 6.6655%). 30.8 % d. Does BMW report a net deferred tax asset or liability on its balance sheet? The company reports a net deferred tax liability - of 226 million