Dunn Co.’s 2006 income statement reported $90,000 income before provision for income taxes. To compute the provision for federal income taxes, the following 2006 data are provided:

Rent received in advance

$16,000

Income from exempt municipal bonds

20,000

Depreciation deducted for income tax purposes in excess of depreciation reported for financial statements purposes

10,000

Enacted corporate income tax rate

30

%

If the alternative minimum tax provisions are ignored, what amount of current federal income tax liability should be reported in Dunn’s December 31, 2006 balance sheet?

  1. $18,000
  2. $22,800
  3. $25,800
  4. $28,800