What is the income tax expense

Reference no: EM131933306

Problem

Oswego Co. at the end of 2012, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows:

Pretax financial income: $600,000
Estimated litigation expense: $1,500,000
Installment sales: $(1,200,000)
Taxable income: $900,000

The estimated litigation expense of $1,500,000 will be deductible in 2014 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of $600,000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $600,000 current and $600,000 noncurrent. The income tax rate is 30% for all years.

What is the income tax expense?

Reference no: EM131933306

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