Lewis Eagle Corporation concluded that it was able to exclude $ 2,500,000 in income from its current tax return. Income before the exclusion is $ 6,000,000. There are no book- tax differences. This income is subject to a 30% tax rate. Based on its technical merits, Lewis Eagle determined that it is more likely than not that the exclusion would be sustained upon examination by tax auditors. The possible outcomes and their related probabilities are presented below.
Filed Amount of the Likelihood That the Tax
Exclusion That Management Position Will Be Sustained at
Expects to Maintain This Level (%)
$ 2,500,000 …………………………………….10%
2,000,000 ………………………………………20%
1,500,000 ……………………………………… 25%
1,000,000 ……………………………………… 35%
880,000 ………………………………………… 10%
Required
Determine the amount of tax benefit from the exclusion that Lewis Eagle should recognize in its tax provision for the current year and prepare the journal entry needed to record the tax provision for the