As of 12/31/19 (the first year of operation), you have been provided the following information regarding Bob Shop Corporation:

Pre-Tax Income for FY19 $7,500,000

Tax Exempt Interest Expense 250,000

Increase in Bad Debt Reserve 400,000

Tax depreciation expense 1,600,000

Book depreciation expense 1,000,000

2019 Federal Tax Credit generated 35,000

Assume Bob Shops federal statutory tax rate is 21%. The Company operates in the following states:

State	Statutory Tax Rate	Apportionment %
Idaho	7.6%	65%

Bob Shop is on the current method of deducting state taxes.

Assume no valuation allowance.

During 2020, the following events occurred:

• Upon filing the tax return, there were adjustments to the 2019 amounts as follows:
  • Tax depreciation expense increased from $1,600,000 to $2,000,000
  • As a result of the R&D credit study performed, the company decided to claim a more aggressive credit of $65,000. The more likely than not R&D credit generated did NOT increase as a result of the study.
• The Companys apportionment also changed when filing its tax returns as follows:

State	Statutory Tax Rate	Apportionment %
Idaho	7.6%	50%

Additionally during 2020 (Year 2 of operations), the following events occurred:

• Bob Shop had pre-tax income for FY19 of $10,000,000.

• Bob Shop received $400,000 of tax exempt interest
• Tax depreciation was less than book depreciation expense by 300,000. Accumulated book depreciation at the end of 2020 is 2,000,000.
• At the end of 2020, ABS has no bad debt reserves on the balance sheet.
• For 2020, ABS will have the same federal and state tax rates from the filing of its 2019 tax return.