A company purchased property in year 1 with a cost basis of $120,000 and a useful life of eight years. The company is using straight-line depreciation for book purposes and accelerated depreciation over a five-year period for tax purposes. The depreciation for tax and books follows.

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Books Tax Differenc e Year 1 $15,000 $24,000 $(9,000) Year 2 15,000 38,400 (23,400) Future Years Year 3 15,000 23,040 (8,040) Year 4 15,000 13,800 1,200 Year 5 15,000 13,800 1,200 Year 6 15,000 6,960 8,040 Year 7 15,000 15,000 Year 8 15,000 0 15,000