On February 12, 2002, Nancy Trout and Delores Lake formed Kingfisher Corporation to sell fishing tackle. Pertinent information regarding Kingfisher is summarized as follows:

• Kingfisher's business address is 1717 Main Street, Ely, MN 55731; its telephone number is (218) 555-2211; and its e-mail address is kingfisher@kf.com.

• The employer identification number is 11-1111111, and the principal business activity code is 451110.

• Nancy owns 50% of the common stock and is president of the company, and Delores owns 50% of the common stock and is vice president of the company. No other class of stock is authorized.

• Both Nancy and Delores are full-time employees of Kingfisher. Nancy's Social Security number is 123-45-6789, and Delores's Social Security number is 987-65-4321.

• Kingfisher is an accrual method, calendar year taxpayer. Inventories are determined using FIFO and the lower of cost or market method. Kingfisher uses the straight-line method of deprecation for book purposes and accelerated depreciation (MACRS) for tax purposes.

• During 2012, the corporation distributed cash dividends of $64,000.

Kingfisher's financial statements for 2012 follow.

Income Statement

Expenses

During 2012, Kingfisher made estimated tax payments of $27,000 each quarter to the IRS. Prepare a Form 1120 for Kingfisher for tax year 2012. Suggested software: H&R BLOCK At Home.

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Income Gross sales Sales returns and allowances Net sales Cost of goods sold Gross profit Dividends received from stock $1,884,000 (64,000) 1,820,000 (736,000) 1,084,000 investments in less-than-20%-owned U.S.corporations 9,000 Interest income State bonds Certificates of deposit $2,500 4,000 6,500 $1,099,500 Total income Salaries-officers 150,000 150,000 Nancy Trout Delores Lake Salariesclerical and sales Taxes (state, local, and payroll) Repairs and maintenance Interest expense: 300,000 232,000 68,000 45,000 10,000 1,800 Business loans Loan to purchase state bonds Advertising Rental expense Depreciation* Charitable contributions Employee benefit programs Premiums on term life insurance policies 11,800 5,000 38,000 32,000 12,000 19,000 on lives of Nancy Trout and Delores Lake; Kingfisher is the designated beneficiary Legal and accounting services Total expenses Net income before taxes Federal income tax Net income per books 12,800 16,000 (791,600) 307,900 (105,593) $ 202,307