XYZ is a startup that has been in operation for the past three years. Pre$-$tax income has been negative during these three years. How should XYZ account for its taxes during these three years if we assume its effective tax rate is $21\%?$

a$.$

Show tax provision $($expense$)$ as zero because no tax will currently be paid to or refunded from IRS

b$.$

Show negative tax expense at $21\%$ of pre$-$tax income through deferrals and create deferred tax assets because of net operating loss carryforwards

c$.$

Do as in $($b$)$ above but create valuation allowance for the entire deferred tax assets, therefore reducing the effective tax rate to $0\%$ and tax expense to zero during the three years

d$.$

Do not adopt deferred tax accounting but instead show only taxes actually paid to IRS as tax expense until the company turns profitable

e$.$

None of the above