TPW$,$ a calendar year taxpayer, sold land with a $$613,000$ tax basis for $$785,000$ in February. The purchaser paid $$78,500$ cash at

closing and gave TPW an interest$-$bearing note for the $$706,500$ remaining price. In August, TPW received a $$56,525$ payment

from the purchaser consisting of a $$35,325$ principal payment and a $$21,200$ interest payment. In the first year after the year of

sale, TPW received payments totaling $$108,050$ from the purchaser. The total consisted of $$70,650$ principal payments and

$$37,400$ interest payments.

Required:

a$.$ For the first year after the year of sale, compute the difference between TPW$\text{'}$s book and tax income resulting from the

installment sale method.

b$.$ Is this difference favorable or unfavorable?

c$.$ Using a $21$ percent tax rate, determine the effect of the difference on the deferred tax asset or liability generated in the year of

sale.

Complete this question by entering your answers in the tabs below.

Required $A$

For the first year after the year of sale, compute the difference between TPW$\text{'}$s book and tax income resulting from the

installment sale method.

Note: Round gross profit percentage to $2$ decimal places and final answer to the nearest whole dollar amount.