Tara Corporation uses the equity method of accounting for its 40% investment in Flax's common stock. During 2017, Flax reported earnings of $750,000 and paid dividends of $250,000. Assume that:
∙ All undistributed earnings of Flax will be distributed as dividends in future periods.
∙ The dividends received from Flax are eligible for the 80% dividends received deduction.
∙ No other temporary differences exist.
∙ Tara's income tax rate is 35%.
Required:
What would be the increase in the deferred tax liability during 2017 from the preceding transactions?