Tru Developers, Inc., sells plots of land for industrialdevelopment. Tru recognizes income for financial reporting purposesin the year it sells the plots. For some of the plots sold thisyear, Tru took the position that it could recognize the income fortax purposes when the installments are collected. Income that Trurecognized for financial reporting purposes in 2018 for plots inthis category was $70 million. The company expected to collect 60%of each sale in 2019 and 40% in 2020. This amount over the next twoyears is as follows:

2019	$	42	million
2020		28	million
	$	70	million

Tru’s pretax accounting income for 2018 was $100 million. In itsincome statement, Tru reported interest income of $15 million,unrelated to the land sales, for which the company’s position isthat the interest is not taxable. Accordingly, the interest was notreported on the tax return. There are no differences betweenaccounting income and taxable income other than those describedabove. The enacted tax rate is 40 percent.

Management believes the tax position taken on the land sales has agreater than 50% chance of being upheld based on its technicalmerits, but the position taken on the interest has a less than 50%chance of being upheld. It is further believed that the followinglikelihood percentages apply to the tax treatment of the land sales($ in millions):

Amount Qualifying for Installment Sales Treatment			Percentage Likelihood of Tax Treatment Being Sustained
$	70			20	%
	60			20	%
	50			20	%
	40			20	%
	30			20	%

Required:
1. What portion of the tax benefit of tax-freeinterest will Tru recognize on its 2018 tax return?
2. What portion of the tax benefit of tax-freeinterest will Tru recognize on its 2018 financial statements?
3-a. What portion of the tax on the $70 millionincome from the plots sold on an installment basis will Tru deferon its 2018 tax return?
3-b. What portion of the tax on the $70 millionincome from the plots sold on an installment basis will Tru deferin its 2018 financial statements?
4. Prepare the journal entry to record incometaxes in 2018 assuming full recognition of the tax benefits in thefinancial statements of both differences between pretax accountingincome and taxable income.
5. Prepare the journal entry to record incometaxes in 2018 assuming the recognition of the tax benefits in thefinancial statements you indicated in requirements 1-3.