Additional information:

$1.$ LMM is on a cash basis for tax purposes except for fixed assets. Fixed assets are capitalized for tax purposes and depreciated using the modified accelerated cost recovery system $($MACRS$).$ The company uses the straight$-$line depreciation method for financial statement purposes.

The company currently owns property, plant and equipment purchased on January $1,2020$ for $$60,000.$ For financial purposes these assets have a five$-$year life with no residual $($salvage$)$ value at the end of the five years. The depreciation schedule under MACRS is as follows: $33\%$ in $2020,44\%$ in $2021,15\%$ in $2022,$ and $8\%$ in $2023.$

$2.$ LMM had taxable income of $$40,000$ in $2020,$ and $$80,000$ in $2021.$ They expect future taxable income of $$65,000$ in $2023$ and $$100,000$ in $2024.$

$3.$ In $2022,$ LMM recorded a pre$-$tax loss of $$250,000.$ This included $$5,000$ in tax$-$free municipal bond interest. LMM intends to maximize their two years of allowable loss carryback and then use any remaining carryforward as soon as possible.

The tax rate schedule that has been in effect since $2020$ is $45\%$ in $2020$ and $2021,40\%$ in $2022,35\%$ in $2023$ and $30\%$ thereafter.