For the year ended December 31, 2007, Maple Corp.’s book income, before federal income tax, was $100,000. Included in this $100,000 were the following:

Provision for state income tax

$1,000

Interest earned on US Treasury Bonds

6,000

Interest expense on bank loan to purchase US Treasury Bonds

2,000

Maple’s taxable income for 2007 was

  1. $ 96,000
  2. $ 97,000
  3. $100,000
  4. $101,000

C