Tetra Corp. recorded book income of $215,000 in 2018. It does not have any permanent differences and the only temporary difference relates to $36,000 unearned income that it recorded for book purposes. Tetra anticipates satisfying this liability equally over the following three years. The current enacted tax rate is 36%. The enacted tax rates for the following three years are 33%, 38%, and 43%, respectively. Under U.S. GAAP, what deferred tax amount should Tetra Corp. record for this temporary difference?

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The deferred tax liability is calculated by applying the future tax rates to the temporary difference as it reverses. The $36,000 unearned income will be recognized as taxable income over the next three years: $12,000 each year. The deferred tax liability is: ($12,000 * 33%) + ($12,000 * 38%) + ($12,000 * 43%) = $3,960 + $4,560 + $5,160 = $13,680.