• We are going to calculate and project theactual"Current Taxes" to be paid (Tab "A" marked withYELLOW HIGHLIGHT), by;

1. On Tab "B" calculate the estimated depreciation expense under MACRS;
2. Calculate "Taxable Income"by starting with the given EBT from the Income Statement,backing out (adding back in)the originalStraight Linedepreciation and then deducting (subtract out)the new calculatedMACRSdepreciation).
3. Use your newTaxable Incomeon Tab "C" to calculate the actual current Income Tax, then;
4. Carry your Income Tax Expense, calculated on Tab "C" to the "Current Tax" line on the Income Statement,highlighted in yellow.

The MACRS Table and Tax Rate Tables are pre-loaded.

K M N O P $000s Tax Bracket Table OLD (Obsolete after 2017) At least Not over Base Marginal 0.00 50.00 0 15% 50.00 75.00 7.50 25% 75.00 100.00 13.75 34% 100.00 335.00 22.25 39% 335.00 10,000.00 113.90 34% 10,000.00 15,000.00 3,400.00 35% 15,000.00 18,333.33 5, 150.00 38% 18,333.33 12, 116.67 35% Corporate Tax Rate 2018 (and later) Federal 21% Flat rate due to PL 115-97 Signed into law 22-Dec-2017. Corporate Tax Rate 2017 (and later) NC 3% Statutory Rate, per NCDOR site Tax Rate (Flat) 24% Calculation of Current Tax $ thousand $ thousand (except (except EPS) 20x2 EPS) 20x1 Estimated Tax Rate 24% 24% Pre-Tax Income (EBT) (Straightine Depr) From P&L Statement as Given 710 390 Taxable Income after Adjustment for MACRS 0 0 Tax Calculation, Income Tax ExpenseFined Assets (at Cost) Land and Buildings Machinery and Equipment Furniture and Fixtures Vehicles Less Accumulated Depreciation Additions to Fixed Assets (at Cost), Net 12 Land and Buildings 0.0 13 Machinery and Equipment (305.0) 14 Furniture and Fixtures (45.0) 15 Vehicles (25.0) 16 17 Book Depreciation 13 Land and Buildings 40 49 19 Machinery and Equipment 15 39 20 Furniture and Fixtures 10 9 21 Vehicles 5 Total 10% 95" 23 24 25 MACR Depreciation Classes 26 Land and Buildings 20 2? Machinery and Equipment 7 2' Furniture and Fixtures 10 29 Vehicles 5 MACR Depreciation (first Eyears as required by IRS regulations) 3yr 5yr 7w 10yr 20w 33% 29% 14.29% 10% 3.75% 44.45% 32% 24.49% 13% 7.22% 14.97% 19.29% 17.49% 14.40% 55.77% 7.41% 11.52% 12.49% 11.52% 6.13% 11.52% 3.93% 9.22% 5.71% 5.76% 8.92% 7.37% 5.29% . 9 Calculation of Taxable Income 50 719 390 51 Add Back Book Depreciation 100 95 52 Less MACRS Depreciation 53 Taxable Income (Adjusted for MACRS Depreciation) 54 B.Depr and Taxable Income A B C D ABC Company Income Statement for the Year Ended December 31, 20x2 and 20x $ thousand $ thousand (except EPS) (except EPS) 3 20x2 20x1 Total Operating Revenues (or Total Sales Revenue) 2,575.0 2,050.0 5 Less Cost of Goods Sold (COGS) 1, 150.0 985.0 6 Gross Profits 1,425.0 1,065.0 Less Operating Expenses: 8 Selling Expenses 275.0 250.0 9 General and Administrative Expenses (G&A) 225.0 205.0 10 Depreciation Expense 100.0 95.0 11 Fixed Expenses 75.0 75.0 12 Total Operating Expenses 675.0 625.0 13 Net Operating Income 750.0 440.0 14 Other Income 20.0 15.0 15 Earnings Before Interest and Taxes (EBIT) 770.0 455.0 16 Less Interest Expense 17 Interest on Short-Term Notes 10.0 10.0 18 Interest on Long-Term Borrowing 50.0 55.0 19 Total Interest Expense 60.0 65.0 20 Pretax Earnings (Earings Before Taxes, EBT) 710.0 390.0 21 Less Taxes: 22 Current Tax 23 Deferred Tax 170.4 93.6 24 Total Tax (Rate = Page C) 170.4 93.6 25 Net Income (Earnings After Taxes, NI, EAT) 539.6 296.4 26 Less: Preferred Stock Dividends 95.0 95.0 27 Net Earnings Available to Common Stockholders 444.6 201.4 28 Eamings per Share (100,000 shares outstanding) $4.45 $2.01 29 Addition to Retained Earnings 333.6 112.4 30 Dividends Paid to Holders of Common Stock 111.0 89.0