Two independent situations are described below. Each situation has future deductible amounts and/or future taxable amounts produced by temporary differences.

Situation	1		2
Taxable income	$40,000		$80,000
Amounts at year-end:
Future deductible amounts	5,000		10,000
Future taxable amounts	0		5,000
Balances at beginning of year:
Deferred tax asset	1,000		4,000
Deferred tax liability	0		1,000

The enacted tax rate is 25% for both situations. Determine the income tax expense for the year.

Situation 1

Situation 2

a.$10,000$20,000

b.$9,750$21,750

c.$5,000$17,000

d.$0$0