2. Kara Fashions uses the straight-line depreciation for financial statement reporting and MACRS for income tax reporting. Three years after its purchase, one of Karas buildings has a book value of $440,000 and a tax basis of $310,000. There were no other temporary differences and no permanent differences. Taxable income was $5 million and Karas tax rate is 40%. What is the deferred tax liability to be reported in the balance sheet? Assume that the deferred tax liability balance was $50,000 in the previous year.

Prepare the appropriate journal entry to record income taxes this year, please show how you came to the answer.