2. On your review of the books and records of Ridge Corporation, you note the following information pertaining to its tax provision:

Net income per books $615,100 Book income tax expense 144,900 Dividends received deduction 70,000 Capital gains 50,000 Capital losses (60,000)

MACRS depreciation 80,000 Book depreciation 65,000

a. Calculate Ridge’s taxable income and Federal income tax liability for the year.

b. Calculate Ridge’s deferred income tax liability.

3. Bengal Corporation’s reported book income was $30,000,000. Bengal’s net income included straight-line depreciation of $3,500,000, $25,000 of City of Denver bond interest, $4,000,000 of dividend income from a 30%-owned U.S.

corporation, and $6,800,000 of Federal income tax expense. Bengal Corporation paid $8,000,000 to the U.S. government toward its current-year tax liability.

Bengal’s MACRS deduction for the year totaled $2,000,000. How much Federal income tax will Bengal owe (or receive as a refund)?