Cool Drain co. reports total income tax expense of $175,000 in year 1. Taxable income for the year is $420,000 and the company's tax rate is 35 percent. On Cool Drain's Year 1 balance sheet, the company will report a:

1. deferred tax asset of $9,800 due to a temporary difference of $28,000

2. deferred tax liability of $9,800 due to a temporary difference of $28,000

3. deferred tax asset of $28,000 due to a temporary difference of $80,000

4. deferred tax liability of $28,000 due to a temporary difference of $80,000