You have been assigned to compute the income tax provision for Tulip City Flowers Inc. (TCF) as

Question:

You have been assigned to compute the income tax provision for Tulip City Flowers Inc. (TCF) as of December 31, 2015. The company's federal income tax rate is 34 percent. The company's income statement for 2015 is provided below:
Tulip City Flowers Inc.
Statement of Operations at December 31, 2015
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 other income.......................................................25,000
Income before income taxes............................................$ 4,525,000
You identified the following permanent differences:
Interest income from municipal bonds................................................$10,000
Nondeductible stock compensation........................................................5,000
Domestic production activities deduction..............................................8,000
Nondeductible fines...............................................................................1,000
TCF prepared the following schedule of temporary differences from the beginning of the year to the end of the year:

Tulip City Flowers Inc. Temporary Difference Scheduling Template Beginning Ending Taxable Temporary Differences BOY EOY

Deductible Beginning Deferred BOY Current ΕΟΥ Ending Deferred Temporary Cumulative Year Cumulative Differences T/D Ta

Required:
a) Compute TCF's current income tax expense or benefit for 2015.
b) Compute TCF's deferred income tax expense or benefit for 2015.
c) Prepare a reconciliation of TCF's total income tax provision with its hypothetical income tax expense in both dollars and rates.
d) Assume TCF's tax rate increased to 35 percent in 2015. Recompute TCF's deferred income tax expense or benefit for 2015 using the following template: