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Net income per books (before federal income taxes) $740,000 Federal income tax expense per books (156,912) Net income per books (after federal income taxes) $583,088

Net income per books (before federal income taxes) $740,000

Federal income tax expense per books (156,912)

Net income per books (after federal income taxes) $583,088

Tax-exempt interest income 8,500

Interest on loan to purchase tax-exempt bonds 7,500

MACRS depreciation exceeding book depreciation 44,000

Net capital loss 6,500

Insurance premium on life of corporate officer where Lambda is the beneficiary 8,200

Excess charitable contributions carried over to next year 3,800

a. Prepare a reconciliation of Lambda's taxable income before special deductions with its book income.

b. Prepare a tax provision reconciliation as in Step 9 of the Tax Provision Process. Assume a 21% tax rate.

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