Creighton Corp. is a retailer.All of its operations are conducted in the US.It is an accrual method calendar year corporation, which began business in Year 1.For the year ended 12/31/Year 2, Creighton reported $7,000,000 EBIT on its financial statements prepared in accordance with GAAP. The corporate records reveal the following information.

• Creighton's Year 2 book depreciation was $122,000 and its tax depreciation was $150,000.
• In Year 2, Creighton capitalized $62,000 indirect expenses to manufactured inventory for book purposes and $55,000 indirect expenses to manufactured inventory under the tax uniform capitalization rules.The difference in these amounts was attributable to executive compensation.
• Due to the increased capitalized executive compensation, Creighton's Year 2 cost of goods sold for book purposes was $1,400,000 and its cost of goods sold for tax purposes was $1,409,000
• During Year 2, Creighton sold assets yielding the following gains/losses:
• 1231 gain of $950,000
• Capital losses of $720,000
• 1245 gain of $67,000
• In Year 2, Creighton developed a patent with a 17 year-life and incurred research expenditures of $180,000.
• In Year 2, Creighton's CFO died in a skiing accident.The corporation collected $800,000 in life insurance proceeds.During Year 2, Creighton paid $12,000 premium on the policy.
• In December Year 2, Creighton settled a lawsuit and agreed to pay $130,000 to a customer for faulty goods.As of year-end, Creighton had not made payment to the customer.
• In Year 1 (not a typo - Year 1), Creighton deducted $220,000 worth of 1231 losses

Creighton does not intend to claim any tax credits for Year 2.