It is January 1, 2017. Tyme Magazine generated cash revenue from magazine subscriptions in the following amounts year 1: $500m, year 2: $400m, year 3: $300m, and reported these annual amounts to the IRS. However, because some of that revenue was from customers who prepaid, in accordance with GAAP, Tyme had to recognize revenue based on when the revenue was earned specifically $400m each year.

Tyme generated $50m in cash expenses each year (recognized identically for book and tax purposes). In addition, Tyme faces a 40% tax rate.

Which of the following statements is most accurate?

A All else equal, Tyme will show higher net income for tax purposes than for book purposes in year 1.

B Over the next 3 years, Tyme will pay a total of $40 million fewer cash taxes than the tax expense reported for book purposes.

C On January 1, 2017, there will be a $100 million deferred tax asset created on the companys balance sheet.

D On January 1, 2017, there will be a $40 million deferred tax asset created on the companys balance sheet.

E There will be a $40 million deferred tax asset balance on the companys balance sheet on January 1, 2020.