Joffy Company began operating on January 1, 2012. At the end of the first year of operations, Joffy reported $875,000 income before income taxes on its income statement but taxable income of $940,000 on its tax return. This difference arose because $65,000 in expenses incurred during 2012 were not yet deductible for income tax purposes according to the income tax regulations. The tax rate is 30%.

1. Compute the amount of income tax that Joffy legally owes for taxable income generated during 2012.

2. Compute the amount of income tax expense to be reported on Joffy’s income statement for 2012.

3. State whether Joffy has a deferred income tax asset or a deferred income tax liability as of the end of 2012. What is the amount of the asset or liability?