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Permtemp Corporation formed in 2011 and for that year reported the following bookincome statement and balance sheet excluding the federal income tax expense deferredtax assets and deferred tax liabilities:Sales $20000000Cost of goods sold$ (15000000 )Gross profit $ 5000000Dividend income 50000Tax-exempt interest incomeTotal income $ 5065000Expenses:Depreciation $ 800000Bad debts 400000Charitable contributions 100000Interest 475000Meals and entertainment 45000Other 3855000Total expenses )Net loss before federal income taxes(5675000 )Cash $ 500000Accounts receivable $ 2000000Allowance for doubtful accounts (250000) 1750000Inventory 4000000Fixed assets $10000000Accumulated depreciation(800000 ) 9200000Investment in corporate stock 1000000Investment in tax-exempt bonds 50000Total assets $16500000Accounts payable $2610000Long-term debt 8500000Common stock 6000000Retained earnings(610000)Total liabilities and equity $16500000Additional information for 2011:The investment in corporate stock is comprised of less-than-20%-owned corporations.Depreciation for tax purposes is $1.4 million under MACRS.Bad debt expense for tax purposes is $150000 under the direct writeoff method.Limitations to charitable contribution deductions and meals and entertainmentexpenses must be tested and applied if necessary.Qualified production activities income is zero.Required for 2011:a. Prepare page 1 of the 2011 Form 1120 computing the corporation s NOL.34% tax rate.Note: For 2011 forms go to forms and publications previous years at the IRS websitewww.irs.gov.

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