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Li Corporation reported pretax book income of $ 7 2 0 , 0 0 0 . Tax depreciation exceeded book depreciation by $ 4 2

Li Corporation reported pretax book income of $720,000. Tax depreciation exceeded book depreciation by $424,000. Li's beginning book (tax) basis in its fixed assets was $2,020,000($1,796,000) and its ending book (tax) basis is $1,920,000($1,344,000). In addition, the company received $420,000 of tax-exempt municipal bond interest. The company's prior-year tax return showed taxable income of $37,000. Assuming a tax rate of 21 percent, compute the company's deferred income tax expense or benefit.

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