A firm's income tax return shows taxes currently payable for Year 4 of $35,000. It reports deferred tax assets before any valuation allowance of $24,600 at the beginning of Year 4 and $27,200 at the end of Year 4. It reports deferred tax liabilities of $18,900 at the beginning of Year 4 and $16,300 at the end of Year 4.
a. Assume for this part that the valuation allowance on the deferred tax assets totaled $6,400 at the beginning of Year 4 and $7,200 at the end of Year 4. Compute the amount of income tax expense for Year 4.
b. Assume for this part that the valuation allowance on the deferred tax assets totaled $6,400 at the beginning of Year 4 and $4,800 at the end of Year 4. Compute the amount of income tax expense for Year 4.