10. LO.8 LawnCo and TreeCo operate in the same industry, and both report a 25%

effective tax rate (combined Federal, state, and global). Their book income and current, deferred, and total tax expense are reported below.

LawnCo TreeCo Book income before tax $600,000 $780,000 Current tax expense $200,000 $ 20,000 Deferred tax expense (benefit) (50,000) 175,000 Total Federal, state, and global tax expense $150,000 $195,000 Effective tax rate 25% 25%
ShrubCo is a competitor of both of 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 preceding information. ShrubCo’s address is 9979 West Third Street, Peru, IN 46970.