LO.6 LawnCo and TreeCo operate in the same industry, and both report a 30% effective tax rate. Their book income and current, deferred, and total tax expense are reported below.

LawnCo TreeCo Book income before tax $500,000 $650,000 Current tax expense $200,000 $ 20,000 Deferred tax expense (benefit) (50,000) 175,000 Total tax expense $150,000 $195,000 Effective tax rate 30% 30%

ShrubCo is a competitor of both these companies. Prepare a letter to Laura Collins, VP-Taxation of ShrubCo, outlining your analysis of the other two companies’ effective tax rates, using only the information above. ShrubCo’s address is 9979 West Third Street, Peru IN 46970.