Armageddon Corporations corporate accounting group provides you with the following information about the year ended December 31, 2018.

Income before all income taxes (GAAP basis) $25,000,000

Depreciation expense included in GAAP income above 3,200,000

Depreciation expense, tax basis (IRC) 4,700,000

Entertainment expenses (assume not deductible) 450,000

Meals expense (assume 50% deductible for tax) 183,000

Inventory write-down (inventory to be disposed of after 12/31/18)) 450,000

Interest income, municipal bonds 175,000

Income earned in a country with a 10% tax rate, no U.S.

federal income taxes are due on this income now or in the future 5,200,000

Solar power tax credit 100,000

State income tax expense (and currently payable), calculated for you 125,000

Assume there are no temporary or permanent differences for state income taxes.

Required:

1. Calculate book taxable income. (GAAP)
2. Calculate tax taxable income. (Tax return)
3. Prepare the journal entry to record the income tax provision and all related assets and liabilities (deferred taxes and taxes payable/refundable).
4. Calculate the effective tax rate.
5. Reconcile the effective tax rate to the federal statutory tax rate of 21%.