On January 1, 2007, Corn Corp. purchased 40% of the voting common stock of Cob, Inc. and appropriately accounts for its investment by the equity method. During 2007, Cob reported earnings of $380,000 and paid dividends of $140,000. Corn assumes that all of Cob's undistributed earnings will be distributed as dividends in future periods when the enacted tax rate will be 30%. Ignore the dividend-received deduction. Corn's current enacted income tax rate is 25%. The increase in corn's deferred income tax liability for this temporary difference is
a. $114,000.
b. $42,000
c. $28,800.