Assume the following inventory footnote was obtained from the Deere & Companys 2016 10-K ($ millions).

Inventories Most inventories owned by Deere & Company and its United States equipment subsidiaries are valued at cost, on the last-in, first-out (LIFO) basis. Remaining inventories are generally valued at the lower of cost, on the first-in, first-out (FIFO) basis, or market. The value of gross inventories on the LIFO basis represented 61 percent of worldwide gross inventories at FIFO value on October 31, 2016 and 2015, respectively. If all inventories had been valued on a FIFO basis, estimated inventories by major classification at October 31 in millions of dollars would have been as follows:

We notice that not all of Deeres inventories are reported using the same inventory costing method (companies can use different inventory costing methods for different inventory pools).

What effect has the use of LIFO inventory costing had on Deeres tax liability for 2016 only (assume a 35% income tax rate)?

Question 2 options:

	$85 million tax savings
	$45.5 million tax savings
	$396 million tax savings
	$130 million tax savings