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Wildhorse Co. at the end of 2017, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax

Wildhorse Co. at the end of 2017, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income $1380000 Estimated litigation expense 3400000 Installment sales (2400000) Taxable income $2380000 The estimated litigation expense of $3400000 will be deductible in 2019 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of $1200000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $1200000 current and $1200000 noncurrent. The income tax rate is 30% for all years.

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