The deferred tax liability for year 1 will be $780.
Pretax Income = $4,657 = ( $7,192 − $2,535)
Taxable Income = $2,755 = ($7,192 − $4,437)
Deferred Tax liability = $780 = [($4,657 − $2,755)(0.41)]
Alternative solution:
The difference in depreciation at the end of year one is $12,676 × (0.35 − 0.20) = $1901.
Deferred tax liability = difference in depreciation × tax rate = $1901 × 0.41 = $780.
