The following happened in a recent M&A transaction: PP&E of the target company was increased from its original book basis of $650 million to $800 million to reflect fair market value for book purposes in accordance with the purchase method of accounting. No "step-up" for tax purposes Original tax basis of $650 million Assuming a corporate tax rate of 35%, for book purposes, the company should record the following: A deferred tax liability equal to $280 million A deferred tax asset equal to $280 million A deferred tax liability equal to $52.5 million A deferred tax asset equal to $52.5 million