First Bank has some question as to the tax-free nature of $5 million of its municipal bond

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First Bank has some question as to the tax-free nature of $5 million of its municipal bond portfolio. This amount is excluded from First Bank's taxable income of $55 million. Management has determined that there is a 65% chance that the tax-free status of this interest can't withstand scrutiny of taxing authorities. Assuming a 40% tax rate, what amount of income tax expense should the bank report?

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Intermediate Accounting

ISBN: 9781259722660

9th Edition

Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas

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