Question
In 20x2, TNS, Inc. reports the following: Consolidated net book income before taxes = $15,000,000, broken down as follows: 1. Net book income before taxes
In 20x2, TNS, Inc. reports the following: Consolidated net book income before taxes = $15,000,000, broken down as follows:
1. 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.
2. 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 deferred income tax expense for 20x2? [Enter as a positive number.]
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