In November and December Year 1, Dorr Co., a newly organized magazine publisher, received $72,000 for 1,000 3-­year subscriptions at $24 per year, starting with the January Year 2 issue. Dorr elected to include the entire $72,000 in its Year 1 income tax return

This answer is correct. SFAC 5 states that revenues are to be recognized when realized or realizable, and earned. At 12/31/Y1, none of the subscription revenue has been earned, since magazine delivery will not begin until Year 2. Therefore, unearned subscriptions revenue in the 12/31/Y1 balance sheet is $72,000 and subscriptions revenue in the Year 1 income statement is $0. Note that the treatment of the $72,000 collection for tax purposes does not determine its treatment for financial accounting purposes.