Question
In 20x2, TNS, Inc. reports the following: Consolidated net book income before taxes = $15,000,000, broken down as follows: Net book income before taxes earned
In 20x2, TNS, Inc. reports the following:
Consolidated net book income before taxes = $15,000,000, broken down as follows:
Net book income before taxes earned in the U.S. of $13,000,000. This income is taxed in the U.S. and nowhere else. Ignore state taxes. All of the book/tax differences described below related to this income.
Net book income before taxes earned overseas through wholly-owned subsidiaries incorporated in foreign countries of $2,000,000. This income is not taxable in the U.S. but is subject to a foreign tax rate of 10%. There are no book/tax differences associated with this foreign income.
Other information:
The company has no uncertain tax positions and does not need to record any valuation allowances.
The company's ledger at December 31, 20x1 shows the following:
Deferred Asset Account: Debit balance of $753,900
Deferred Liability Account: Credit balance of $1,680,000
Book depreciation is $4,000,000; tax depreciation is $5,000,000
The company must capitalize into ending inventory $60,000 in additional Section 263A costs (the $60,000 is already net of prior year reversals)
The companys allowance for bad debts increased by $50,000 during the year
The companys liability for warranties decreased by $20,000 during the year
The company increased its contingent liability (for probable settlements with customers who slipped and fell on its property) by $260,000
Included in U.S. book income is:
$30,000 of interest income from municipal bonds
$375,000 of life insurance proceeds from received on the death of an executive
Expenses in U.S. book income include:
$20,000 of business meals NOT FROM RESTAURANTS
$10,000 of business entertainment expenses
$5,000 in bribes paid to the mayor to secure a zoning variance
What is TNS's current income tax expense for 20x2? [Enter as a positive number.]
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