You have been assigned to compute the income tax provision for Tulip City Flowers, Inc. (TCF) as of December 31, 2019. The companys federal income tax rate is 21%. The companys income statement for 2019 is provided below:

Tulip City Flowers, Inc. Statement of Operations For the Year Ending December 31, 2019

Net sales $20,000,000

Cost of sales 12,000,000

Gross profit 8,000,000

Compensation 500,000

Selling expenses 750,000

Depreciation and amortization 1,250,000

Other expenses 1,000,000

Total operating expenses 3,500,000

Income from operations $4,500,000

Interest and dividend income 25,000

Income before income taxes $4,525,000

You have identified the following temporary and permanent differences:

Interest income from municipal bonds: $10,000

Tax depreciation in excess of book depreciation due to MACRS and Sec. 179: $100,000

Keyman life insurance premiums: $5,000 Dividends received from ABC Inc. (TCF owns 1% of ABC, Inc. stock): $8,000

Nondeductible fines: $1,000

Required:

1. Based upon the above, what is Tulip City Flowers, Inc.s taxable income for the year ended December 31, 2019?

2. Compute Tulip City Flowers Inc.s current income tax expense (tax per corporate tax return).

3. Compute Tulip City Flowers Inc.s deferred income tax expense or benefit.

4. Prepare the journal entries for the income tax provision.

5. Prepare the Schedule M-1 for Tulip City Flowers, Inc.