Operating Loss per books $ (800,000)

Temporary Book/Tax Difference 90,000

Net operating loss for tax $(710,000)

Net income before tax $1,200,000

Reversal of year 1 book/tax difference (90,000)

Taxable income before NOL Deduction $1,110,000

NOL deduction (710,000)

Taxable Income $400,000

d. Use a 34 percent rate to compute Rony's tax expense for financial statement purposes.

e. Use a 34 percent rate to compute Rony's tax payable.

f. Compute Rony's reduction in its deferred tax assets.