Bell, Inc., an accrual basis taxpayer, makes and sells personal computing equipment. It includes basic one-year warranty service with most of its prod-ucts and, for financial reporting purposes, recognizes an estimate of the expenses related to honoring those warranties when the products are sold. Bell reports the following in its financial statements for the year.

Income statement
warranty expense	$500,000
Balance sheet
allowance for existing warranty contracts 1/1	$30,000
Allowance for existing warranty contracts 12/31	$40,000

How much warranty expense may Bell deduct for the year?