Danielle Company uses the equity method to account for its 30% investment in Jupiter Company common stock. Jupiters net income was $110,000; dividends paid were $50,000. Danielle was able to take a 65% dividend exclusion on its tax return. The tax rate is 20%. How much is the deferred tax liability?

1. ($110,000 -$50,000) x .30 x .35 x .20
2. ($110,000 - $50,000) x .30
3. ($110,000 - $50,000) x .30 x .35
4. ($110,000 - $50,000) x .30 x .65