PW, a calendar year taxpayer, sold land with a $544,000 tax basis for $795,000 in February. The purchaser paid $84,000 cash at closing and gave TPW an interest-bearing note for the $711,000 remaining price. In August, TPW received a $58,950 payment from the purchaser consisting of a $35,550 principal payment and a $23,400 interest payment. Assume that TPW uses the installment sale method of accounting.

Required:

1. Compute the difference between TPW's book and tax income resulting from the installment sale method.
2. Is this difference favorable or unfavorable?
3. Using a 21 percent tax rate, compute PTR's deferred tax asset or liability (identify which) resulting from the book/tax difference.