The deferred tax liability at the end of year 3 will be $4,158 ($1,559 + $1,559 + $1,040).
Pretax Income = $9,314 = ( $14,384 − $5,070).
Taxable Income = $6,778 = [$14,384 − ($25,352 × 0.30)].
Deferred Tax liability for year 3 = $1,040 = [($9,314 − $6,778)(0.41)].
Deferred Tax liability for year 1 = $1,559 = [($9,314 − $5,511)(0.41)].
Deferred Tax liability for year 2 = $1,559 = [($9,314 − $5,511)(0.41)].
