NED Corporation reports the following income and expenses for the current fiscal year: Revenues from services: $45M Tax-exempt interest income from municipal bonds of $180,000 k Executive compensation expense of $5.5M ($4.5M of this amount was performance-based - this amount will no longer be deductible under the new tax law, the "TCJA") Other salaries & wages expenses of $10M Non-deductible expenses of $150,000 Depreciation expense for book (financial accounting or GAAP) purposes of $1.45M Depreciation expense for tax purposes of $2M before the TCJA and $3.25M after the TCJA Other general expenses of $17M Domestic production activities deduction of $2.2M (this deduction is no longer available after the TCJA was enacted) Requirements: (20 points) For each of the following situations, determine the following for NED Corporation Book income (aka GAAP income) before taxes Tax expense for book purposes and net book income after taxes Taxable income and tax liability A. Situation 1: the fiscal year ended on or before December 31, 2017. That is, it ended before the Tax Cuts and Jobs Act (TCJA) became law Situation 2: the fiscal year ended on or after December 31, 2018. That is, it ended after the Tax Cuts and Jobs Act (TCJA) became law (5 points) Assuming you know in December 2017 that the TCJA will be enacted, what kind of advice would you give the CFO of NED Corporation to reduce its overall tax exposure? (Hint think of the timing when making investments in the company or sales to customers.) B. NED Corporation reports the following income and expenses for the current fiscal year: Revenues from services: $45M Tax-exempt interest income from municipal bonds of $180,000 k Executive compensation expense of $5.5M ($4.5M of this amount was performance-based - this amount will no longer be deductible under the new tax law, the "TCJA") Other salaries & wages expenses of $10M Non-deductible expenses of $150,000 Depreciation expense for book (financial accounting or GAAP) purposes of $1.45M Depreciation expense for tax purposes of $2M before the TCJA and $3.25M after the TCJA Other general expenses of $17M Domestic production activities deduction of $2.2M (this deduction is no longer available after the TCJA was enacted) Requirements: (20 points) For each of the following situations, determine the following for NED Corporation Book income (aka GAAP income) before taxes Tax expense for book purposes and net book income after taxes Taxable income and tax liability A. Situation 1: the fiscal year ended on or before December 31, 2017. That is, it ended before the Tax Cuts and Jobs Act (TCJA) became law Situation 2: the fiscal year ended on or after December 31, 2018. That is, it ended after the Tax Cuts and Jobs Act (TCJA) became law (5 points) Assuming you know in December 2017 that the TCJA will be enacted, what kind of advice would you give the CFO of NED Corporation to reduce its overall tax exposure? (Hint think of the timing when making investments in the company or sales to customers.) B