RobertA

Tax on 5000 Taxable income = 5000*.5=2500

Net DTA level as at 2004 = 1000
(This had been calculated at 35% tax).
So now you need to re-evaluate this at 50% tax
so tax adjustment = 1000 - 1000 / 0.35 * .5 = -428.57

Temporary Difference (total) in 2005 = 400 (which is a DTA)
Tax on DTA = 400 * .5 = 200

So total tax = Tax Expense - Change in DTA +Change in DTL= 2500 - (-428.57) - 200 = 2728.57
Since the total tax was calculated based on a DTA - DTL change = 0.

(I am not completely sure if I remember all this correctly, so pardon me if I am wrong).

CP