Chapter 17, Problem 17.21E

Uncertain Tax Positions. Lewis Eagle Corporation concluded that it was able to exclude $2,500,000 in income from its current tax return Income before the exclusion is $6,000,000. There are no book-tax differences. This income is subject to a 30% tax rate. Based on its technical merits, Lewis Eagle determined that it is more likely than not that the exclusion would be sustained upon examination by tax auditors. The possible outcomes and their related probabilities follow.

Filed Amount of the Exclusion That Management Expects to Maintain	Likelihood That the Tax Position Will Be Sustained at This Level (%)
$2,500,000	10%
2,000,000	20
1,500,000	25
1,000,000	35
880,000	10

Determine the amount of tax benefit from the exclusion that Lewis Eagle should recognize in its tax provision for the current year and prepare the journal entry needed to record the tax provision for the current year.