Cullumber Company, which began operations at the beginning of $2023,$ produces various products on a contract basis. Each

contract generates a gross profit of $$85,000.$ Some of Cullumber's contracts provide for the customer to pay an

installment basis. Under these contracts, Cullumber collects one$-$fifth of the contract revenue in each of the following $4$

years. For financial reporting purposes, the company recognizes gross profit in the year of completion $($accrual basis$).$ For tax

purposes, Cullumber recognizes gross profit in the year cash is collected $($installment basis$).$

Presented below is information related to Cullumber's operations for $2025$:

In $2025,$ the company completed seven contracts that allow for the customer to pay on an installment basis.

Cullumber recognized the related gross profit of $$595,000$ for financial reporting purposes. It reported only

$$119,000$ of gross profit on installment sales on the $2025$ tax return. The company expects future collections on the

related installment receivables to result in taxable amounts of $$119,000$ in each of the next $4$ years.

In $2025,$ nontaxable municipal bond interest revenue was $$26,600.$

During $2025,$ nondeductible fines and penalties of $$25,200$ were paid.

Pretax financial income for $2025$ amounts to $$490,000.$

Tax rates $($enacted before the end of $2025)$ are $30\%$ for $2025$ and $20\%$ for $2026$ and later.

The accounting period is the calendar year.

The company is expected to have taxable income in all future years.

The company has no deferred tax assets or liabilities at the end of $2024.$Indicate, starting with the line "Income before income taxes", how income taxes are reported on the income statement.

What is Cullumber's effective tax rate?