Scotts Designs uses MACRS for income tax reporting and straight-line depreciation for financial statement reporting.Scotts Designs balance sheet lists a building with a book value of $500,000.The building was purchased three years prior.The building has a tax basis of $350,000.Scotts has no other temporary or permanent differences.Other information:Taxable income $5 million; tax rate 35%.What is the amount of the 1) deferred tax asset or liability, if there is a deferred tax liability balance of $40,000 from the previous year?2) Income Tax Payable and 3) Income Tax Expense

Calculations: (Please show all work)