You are the tax accountant on duty at ABC Tax and Accounting Services. The business owner has assigned you a new import/export tax client, Rony Inc., to assist with computing tax liabilities for its operations.

For its first taxable year, Rony Inc.'s accounting records showed the following:

Operating Loss per books $(800,000)

Temporary Book/Tax Difference 90,000

Net operating loss for tax $(710,000)

a. Use a 34 percent rate to compute Rony's deferred tax asset with respect to the

$90,000 book/ tax difference.

b. Use a 34 percent rate to compute Rony's deferred tax asset with respect to its $710,000 NOL carryforward.

c. Compute Rony's tax benefit ( negative tax expense) reported on its first income statement.