The following information relates to Franklin Freightways for its first year of operations (data in millions of dollars):
Pretax accounting income: $320
Pretax accounting income included:
Overweight fines (not deductible for tax purposes) 13
Depreciation expense 78
Depreciation in the tax return using MACRS: 124
The applicable tax rate is 39%. There are no other temporary or permanent differences.
Franklin's taxable income ($ in millions) is:
◯ $274.
◯ $124.
◯ $46.
◯ $287.