On January 1, Year 1, a company purchased major pieces of manufacturing equipment for a total of $48 million. The company uses straight-line depreciation for financial statement reporting and MACRS for income tax reporting. At December 31, Year 3, the book value of the equipment was $42 million and its tax basis was $32 million. At December 31, Year 4, the book value of the equipment was $40 million and its tax basis was $25 million. There were no other temporary differences and no permanent differences. Pretax accounting income for Year 4 was $30 million.

Required:

Prepare the appropriate journal entry to record the companys Year 4 income taxes. Assume an income tax rate of 25%.

What is the companys Year 4 net income?