Below is an example problem related to deferred tax liabilities: Sanford Corporation began operations in 2012 and reported pretax financial income of $225,000 for the year. Sanford's tax depreciation exceeded its book depreciation by $40,000. Sanford's tax rate for 2012 and years thereafter is 30%. In its December 31, 2012, balance sheet, what amount of deferred tax liability should be reported? Excess depreciation on tax return.......................................................................... $ 40,000 Tax rate.................................................................................................................... x30% Deferred tax liability............................................................................................... $ 12,000