Hafnaoui Company reported pretax net income from continuing operations of $800,000 and taxable income of $500,000. The booktax difference of $300,000 was due to a $200,000 favorable temporary difference relating to depreciation, an unfavorable temporary difference of $80,000 due to an increase in the reserve for bad debts, and a $180,000 favorable permanent difference from the receipt of life insurance proceeds. At the end of the year, the reserve for bad debts had a balance of $100,000; the beginning balance in the account was $20,000. Hafnaoui's beginning book (tax) basis in its fixed assets was $1,000,000 ($800,000) and its ending book (tax) basis is $1,500,000 ($1,100,000).

a. Compute Hafnaoui Company's current income tax expense.

b. Compute Hafnaoui Company's deferred income tax expense or benefit.

c. Compute Hafnaoui Company's effective tax rate.

d. Provide a reconciliation of Hafnaoui Company's effective tax rate with its hypothetical tax rate of 21 percent.

ETR Reconciliation (in $)
Income Tax expense at 21%
Tax benefit or tax expense permanent difference
Income tax provision
ETR Reconciliation (in %)
Hypothetical Income tax rate	21%
Tax benefit or tax expense permanent difference	%
Effective tax rate	%