Reference no: EM132497190

For the year ended December 31, 2017, Micah Company, had pretax financial income of $830,000 in its first year of operations. When reconciling financial income with taxable income, Micah Company noted the following items:

1. Micah had $412,000 of excess tax depreciation since it used an accelerated depreciation method. This difference will reverse equally over a four-year period, 2018-2021.
2. Micah accrued an $83,000 litigation accrual on its financial statements due to pending litigation. It is estimated that the litigation liability will be paid in 2021.
3. Micah received $73,000 pre-payment of rent revenue. The rent revenue will be recognized during the last year of the lease, 2021.
4. Micah earned $33,000 of interest income from New York municipal bonds. Interest revenue from the New York bonds is expected to be $33,000 each year until their maturity at the end of 2021.

Question 1: Micah has an enacted tax rate of 30% for all years. Construct a reconciliation from pretax financial income to taxable income for the year ended December 31, 2017