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ABC Company reported an operating loss of $132,000 for financial

reporting and tax purposes in 2009. The enacted tax rate is 40% for 2009 and all future years. Assume that ABC elects a loss carry-back. No valuation allowance is needed for any deferred tax assets. Taxable income, tax rates, and income taxes paid in ABC's first four years of operations were as follows:
SOLUTIONS TO PROBLEMS MUST BE SUPPORTED BY COMPUTATIONS TO RECEIVE CREDIT, NO EXCEPTIONS.


                     Taxable Income              Tax Rates               Taxes Paid
2005                 $30,000                          30%                       $9,000
2006                 $35,000                          30%                      $10,500
2007                 $42,000                           35%                      $14,700  
2008                 $40,000                           40%                     $16,000

Required:
1.  What is the tax liability for each year?
2.  What amount of tax refund is generated by the NOL?
2.  In what year does a deferred tax asset arise and what is the related NOL.
3.  What year is the deferred tax asset used, and how much?

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