Companys provision for income taxes resulted in eff ective tax rates attributable to loss from continuing operations before cumulative eff ect of change in accounting principles that varied from the statutory federal income tax rate of 34 percent, as summarized in the table below. Year Ended 30 June 2007 2006 2005 Expected federal income tax expense (benefi t) from continuing operations at 34 percent ($112,000) $768,000 $685,000 Expenses not deductible for income tax purposes 357,000 32,000 51,000 State income taxes, net of federal benefi t 132,000 22,000 100,000 Change in valuation allowance for deferred tax assets (150,000) (766,000) (754,000) Income tax expense $227,000 $56,000 $82,000 20 . In 2007, the companys net income (loss) was closest to: A . ($217,000). B . ($329,000). C . ($556,000).