At December 31, 2022, Higley Corporation has one temporary difference which will reverse and cause taxable amounts in 2023. In 2022, a new tax act set taxes equal to 45% for 2023, 40% for 2022, and 34% for 2024 and years thereafter.

Instructions

Explain what circumstances would call for Higley to compute its deferred tax liability at the end of 2022 by multiplying the cumulative temporary difference by:

a. 45%.

b. 40%.

c. 34%.