On its December 31, 2006 balance sheet, Shin Co. had income taxes payable of $13,000 and a current deferred tax asset of $20,000 before determining the need for a valuation account. Shin had reported a current deferred tax asset of $15,000 at December 31, 2005. No estimated tax payments were made during 2006. At December 31, 2006, Shin determined that it was more likely than not that 10% of the deferred tax asset would not be realized. In its 2006 income statement, what amount should Shin report as total income tax expense?

  1. $ 8,000
  2. $ 8,500
  3. $10,000
  4. $13,000