In 2019, its first year of operations, ABC Inc. has a net operating loss of ($100,000) when the tax rate was 17%.

Assume the management of ABC Inc. thinks at the end of 2019, that it is unlikely that the loss carryforward will be realized in the near future. In 2020, ABC has another ($55,000) taxable loss and the tax rate is 15%. Assume due to the development of a new manufacturing process that reduces costs significantly, that at the end of 2020 ABC management now believes it is now more likely than not that they will have >$300,000 of taxable income in 2021. The tax rate enacted for 2021 and onwards is expected to be 18%.

Prepare the required entries based on the above information.