Costello Corporation reported pretax book income of $500,900. During the current year, the reserve for bad debts increased by $6,800. In addition, tax depreciation exceeded book depreciation by $40,900. Finally, Costello received $3,450 of tax-exempt life insurance proceeds from the death of one of its officers. Costello's deferred income tax expense or benefit would be:

Multiple Choice

• $7,851 net deferred tax benefit.

• $7,161 net deferred tax benefit.

• $7,886 net deferred tax expense.

• $7,161 net deferred tax expense.