B is corrent. A deferred income tax liability is the result of a temporary difference which produces future taxable amounts. The insurance premium ($15,000) and the municipal income ($20,000) are both permanent differences, which do not result in a deferred tax liability. Therefore, the 12/31/Y1 deferred tax liability is $0.
A is incorrect. A deferred income tax liability is the result of a temporary difference which produces future taxable amounts. The insurance premium ($15,000) and the municipal income ($20,000) are both permanent differences, which do not result in a deferred tax liability. Therefore, the 12/31/Y1 deferred tax liability is $0.
A is incorrect. A deferred income tax liability is the result of a temporary difference which produces future taxable amounts. The insurance premium ($15,000) and the municipal income ($20,000) are both permanent differences, which do not result in a deferred tax liability. Therefore, the 12/31/Y1 deferred tax liability is $0.
D is incorrect. A deferred income tax liability is the result of a temporary difference which produces future taxable amounts. The insurance premium ($15,000) and the municipal income ($20,000) are both permanent differences, which do not result in a deferred tax liability. Therefore, the 12/31/Y1 deferred tax liability is $0.
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