LawnCo and TreeCo operate in the same industry, and both report a 25% effective tax rate (combined Federal, state, and global). Their book income and current, deferred, and total tax expense are reported below.

ShrubCo is a competitor of both of these companies. Prepare a letter to Laura Collins, VP-Taxation of ShrubCo, outlining your analysis of the other two companies? effective tax rates, using only the preceding information. ShrubCo?s address is 9979 West Third Street, Peru, IN 46970.

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LawnCo TreeCo Book income before tax $600,000 $780,000 Current tax expense Deferred tax expense (benefit) Total Federal, state, and global tax expense $ 20,000 $200,000 (50,000) 175,000 $150,000 $195,000 Effective tax rate 25% 25%