Arjun Company uses the equity method to account for its 40% investment in Joshua Company common stock. Joshuas net income was $160,000; dividends paid were $85,000. Arjun was able to take a 65% dividend exclusion on its tax return. The tax rate is 20%. How much is the deferred tax liability?

a. ($160,000 -$85,000) x .40 x .35

b. ($160,000 - $85,000) x .40 x .20

c. ($160,000 - $85,000) x .40 x .35 x .20

d. ($160,000 - $85,000) x .40 x .65