Question
Please help me with the below problem: The following information is provided for X Corporation for the year ending December 31, 2018: Book earnings before
Please help me with the below problem:
The following information is provided for X Corporation for the year ending December 31, 2018:
Book earnings before income taxes
$6,000
Tax exempt interest income
600
Taxes on foreign income above the U.S. statutory rate
200
State income taxes (before Federal benefit)
500
Annual increase in warranty reserve
200
Dividend received deduction on dividends from foreign subsidiaries
600
Foreign tax credits available after the TCJA
400
Tax over book depreciation for 2018
500
Current year increase in valuation allowance
1,000
Entertainment expenses
400
Foreign derived intangible income (FDII) special deduction
600
X Corporation has not made an assertion under APB 23 that their non-U.S. undistributed earnings will be invested indefinitely or that the earnings will be solely remitted in a tax-free liquidation.The U.S. statutory rate is 21%.Based on all of the information presented, show an effective rate reconciliation showing the dollar amount ofeach reconciling item(i.e. donot combine potentially immaterial amounts) and the impact of each reconciling item on the effective tax rate.
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