Question 2

The Sunny Day Greeting Card Company Inc. has the following earnings history since being incorporated January 1, 20x4.

Taxable Income Tax Rate

20x4 $(400,000) 35%

20x5 (300,000) 33%

20x6 600,000 34%

20x7 1,700,000 32%

20x8 (3,000,000) 35%

20x9 (1,200,000) 31%

20x10 4,000,000 30%

The tax rates were in effect for the entire year and any changes only became known in the year of the change when they also became effective. Assume the condition of more likely than not has been satisfied in all years. Required Calculate the current and deferred portion of income tax expense for the 20x8, 20x9 and 20x10 years.