Question
Test Company reported a balance in deferred tax asset of $25 million as of December 31, 2019 attributable to a temporary difference of $100 million.
Test Company reported a balance in deferred tax asset of $25 million as of December 31, 2019 attributable to a temporary difference of $100 million. As of December 31, 2020, the temporary difference was $64 million. In 2020, Test Company management determined it was more likely than not that only 30% of the deferred tax asset would ultimately be realized. There were no other temporary differences in either 2019 or 2020. Taxable income for the year ended December 31, 2020 was $180 million. The tax rate for both 2019 and 2020 was 25%. What was the income tax expense for the year ended December 31, 2020?
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