FACTS:

TC, Inc. has the following deferred tax assets recorded at December 31, 2022:

Depreciation (reversing equally over the next 2 years) $100,000

Net Operating loss carryforwards (expiring on December 31, 2024) $500,000

Warranty reserves (1 year warranty period) $100,000

Total deferred tax assets $700,000

In addition, TC Inc. has the following deferred tax liabilities recorded at December 31, 2022:

Unrealized gain on short-term investment securities $100,000

Revenue impacted by ASC 606 (to be recognized for tax next year) $100,000

Excess of book over tax basis of land on which TC Inc. has its primary

Manufacturing facility located $500,000

Total deferred tax liabilities $700,000

Based on recent three-year results, it appears that the company has cumulative income. TC Inc.s 5 year budget and plan shows income (no permanent differences for tax are expected) of $50,000 per year with no prospects of increasing that income anytime in the future. No planning opportunities have been identified by TC Inc. (The company cannot outright sell the manufacturing facility and does not believe that a sale/leaseback could be economically accomplished).

REQUIRED:

Using the information provided, determine the amount of valuation allowance needed for TC Inc. at December 31, 2022. The tax rate is 40% for all periods.