On January 1, Genola Company purchased investment securities for $1,000. The securities are classified as trading. By December 31, the securities had a fair value of $1,800 but had not yet been sold. For financial reporting purposes, the $800 unrealized gain is reported in the income statement this year. For income tax purposes, the $800 unrealized gain is not reported until the securities are sold some time in the future. Before including the $800 unrealized gain on the trading securities, income before taxes for the year was $10,000. Assume that there are no other book-tax differences. The income tax rate is 35% for the current year but the enacted tax rate for all future years is 42%. What is the income tax expense for the year?

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