Millie Co. completed its first year of operations on December 31, 2008 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 2009. Millie also has gross profit from installment sales of \($800,000\) recognized currently for financial reporting purposes but will be taxable in 2009 and 2010 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 2008.
2. Determine the changes in Millie’s deferred tax amounts for 2008.
3. Calculate tax expense for Millie for 2008.