In its first taxable year, Band Corporation recognized $957,500 ordinary business income and a $5,500 capital loss. In its second taxable year, Band recognized $1,220,000 ordinary business income, a $12,500 Section 1231 loss and a $2,000 capital gain.

a. Compute Bands' book and taxable income for its first year.

Book income
Tax income

b. Using a 34 percent tax rate, compute Band's deferred tax asset or liability (identify which) on its balance sheet on the last day of the first year.

Deferred tax asset:

c. Compute Band's book and taxable income for its second year.

Book income
Tax income

d. Using a 34 percent tax rate, compute Band's deferred tax asset or liability (identify which) on its balance sheet on the last day of the second year.

Deferred tax asset: