Grand corporation reported pretax book income of $610,000. tax depreciation exceeded book depreciation by $520,000. in addition, the company received $255,000 of tax-exempt municipal bond interest. the company’s prior-year tax return showed taxable income of $64,000. compute the company’s current income tax expense or benefit.

Since the tax rate is not mentioned, The  company’s current income tax expense or benefit is $64000*tax rate.

Explanation:

Net operating loss = pretax book income - depreciation - tax-exempt municipal bond interest

                               = 610000 - 520000 - 255000

                               = -165000

Current tax benefit = Net Operating Loss carryback to prior year*tax rate

                                =64000*tax rate

Therefore, since the tax rate is not mentioned, The  company’s current income tax expense or benefit is $64000*tax rate.

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