Compute the deferred tax benefit

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Question - In 2009, Lobo Corp. reported for financial statement purposes the following revenue and expenses which were not included in taxable income:

Premiums on officer's life insurance under which the corporation is the beneficiary $5,000

Interest revenue on qualified state or municipal bonds 10,000

Estimated future warranty costs to be paid in 2010 and 2011 60,000

Lobo's enacted tax rate for the current and future years is 30%. Lobo has never had any net operating losses (book or tax) and does not expect any in the future. There were no temporary differences in prior years. The deferred tax benefit to be applied against current income tax expense is

A: $18,000

B: $19,500

C: $21,000

D: $22,500

Reference no: EM131768514

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