Question

Reed ​Corporation, an accrual basis​ taxpayer, reports the following results for the current​ year:

Income: $ 290,000 16,000 5,000 9,000 140,000 4,000 Gross profit from manufacturing operations Dividends received from 25%-owned domestic corporation Interest income: Corporate bonds Municipal bonds Proceeds from life insurance policy on key employee Section 1231 gain on sale of land Expenses: Administrative expenses Bad debts Depreciation: 100,000 7,000 70,000 82,000 34,000 46,000 13,000 4,000 2,000 34,100 300 Financial accounting Taxable income Alternative depreciation system (for E & P) NOL carryover Charitable contributions: Current year Carryover from last year Capital loss on sale of stock U.S. production activities deduction Penalty on late payment of federal taxes

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