TPW, a calendar year taxpayer, sold land with a $552,000 tax basis for $760,000 in February. The purchaser paid $76,000 cash at closing and gave TPW an interest-bearing note for the $684,000 remaining price. In August, TPW received a $54,700 payment from the purchaser consisting of a $34,200 principal payment and a $20,500 interest payment. In the first year after the year of sale, TPW received payments totaling $104,400 from the purchaser. The total consisted of $68,400 principal payments and $36,000 interest payments.

1. For the first year after the year of sale, compute the difference between TPWs book and tax income resulting from the installment sale method.
2. Is this difference favorable or unfavorable?
3. 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.

Required A Required B Required 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. (Round gross profit percentage to 2 decimal places. Round your intermediate calculations and final answer to the nearest whole dollar amount.) is quired B Required C > deferred tax asset deferred tax liability Required A Required B Required C For the first year after the year of sale, compute the difference between TPW's book and tax income resulting from the installment sale method. (Round gross profit percentage to 2 decimal places and final answer to the nearest whole dollar amount.) Book/tax difference