Pinnacle West operates in an industry for which NOL carryback is not allowed, and had the following pretax income (loss) over its first three years of operations             2019 $ 1,200,000     2020   (900,000 )   2021   1,500,000        For each year there were no deferred income taxes and the tax rate was 25%. No valuation account was deemed necessary for the deferred tax asset as of December 31, 2020. What was Pinnacle West's income tax expense in 2021?   Multiple Choice   240,000.   160,000.   375,000   480,000.

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Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.