TPW, a calendar year taxpayer, sold land with a $535,000 tax basis for $750,000 in February. The purchaser paid $75,000 cash at closing and gave TPW an interest-bearing note for the $675,000 remaining price. In August, TPW received a $55,950 payment from the purchaser consisting of a $33,750 principal payment and a $22,200 interest payment. Assume that TPW uses the installment sale method of accounting.

Required:

Compute the difference between TPWs book and tax income resulting from the installment sale method.

Using a 21 percent tax rate, compute PTRs deferred tax asset or liability (identify which) resulting from the book/tax difference.