Assume the President signs a stimulus package permitting businesses to expense $250,000 of equipment purchases in the current tax year, provided total equipment purchases do not exceed $750,000. Assume the ABC corporation purchased a machine for $500,000 during the qualifying time period. The machine has a 7-year MACRS life and a 10-year straight line write-off for financial accounting purposes.

a. What is the deferred tax liability balance for Years 1, 5, and 9, assuming a 35-percent marginal tax rate?

b. What is the journal entry to record the deferred tax benefit in Years 1, 5 and 9?