Millie Co. completed its first year of operations on December 31, 2014, with pre-tax financial income of $400,000. Millie accrued a contingent liability of $900,000 for financial reporting purposes; however, the $900,000 will be paid and therefore is deductible for tax purposes in 2015. Millie also has gross profit from installment sales of $800,000 recognized currently for financial reporting purposes but that will be taxable in 2015 and 2016 when the cash is received ($400,000 each year). Millie’s pre-tax financial income includes $38,000 interest earned on its holdings of the bonds of the State of Montana. The tax rate is 30% for all years.

Required:
1. Determine Millie’s taxable income and taxes payable for 2014.
2. Determine the changes in Millie’s deferred tax amounts for 2014.
3. Calculate tax expense for Millie for 2014.