During 2005, Tedd Co. became involved in a tax dispute with the IRS. At December 31, 2005, Tedd's tax advisor believed that an unfavorable outcome was probable. A reasonable estimate of additional taxes was $400,000 but could be as much as $600,000. After the 2005 financial statements were issued, Tedd received and accepted an IRS settlement offer of $450,000. What amount of accrued liability should Tedd have reported in its December 31, 2005 balance sheet?

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