Tax Return Problem. KJJ Corp. was formed on October 10, 2002 by Kimberly Jen (123- 45-6789), Jennifer James (234-56-7 890) and James Kim (345-67-8901). It is a hardware store and is located at 175 Clerk Road, Newtown, OH 45105. KJ's employer identification number is 10-10 10101 and its business codeis 444 130. KJJ's telep hone number is 513-5 25-1234 and its e-mail add ress is KJJCorp@kj.com. KJJ Corp. uses the cal endar year and the accrual basis. It uses straight-li ne d epreciati on fortax and book purposes and FIFO and lower-ofcost-or-market for inventory purposes Kimberly, Jennifer and James each received 200 shares of KJJ Corp.'s common stock on October 10, 2002. No other stock has been issued or is outstanding. Each is a full- time employee of the firm and each is paid $200,0o0. KJJ Corp. made a $105,000 ($35,000 to each owner) cash distribution in 2018. During 2018, KJ Corp. made estimated federal tax paymen ts of $55,000 each quarter Financial informati on for 2018 follows: Income Statement Income $ Sales 5,400,000 20,000 Sales returns and allowan ces $ Net sales 5,380,000 Cost of goods sold 3,120,000 $ Gross profit 2,260,000 Interest income Corporate bon ds $ 20,000 60,000 $ $ Statebonds 80,000 Dividendincome 100,000 $ 2,440,000 80000 Total income Expenses Salaries-officers 600,000 510,000 Salaries and wages-other Lifeinsurance premi ums on three owners/officers KJJ Corp. isthe benefici ary 20,000 $ 30,000 Repairs and mai ntenance $ 249,000 Taxes (state, local, payroll) Interest expen se Loans to acquirestate bo nds 25,000 Other 47,000 $ 72,000 Advertising 36,000 25,000 $ 120,000 $ Charitable contribution Depreciation Employee benefits program 63,000 1,725,000 715,000 635,000 (214,200) Total expenses $ Net income before taxes Federal income taxes Net income per books 500,800 Balance Sheet Assets Cash 12/31/17 400,000 $ 600,000 $ 1,500,000 $ 1,330,000 250,000 260,000 800,000 S 900,000 1,000,000 12/31/18 550,000 Trade and accounts receivables 623,000 Inventories Corporate bonds State bonds $ 851,000 Stock (