CP $09-01($Static$)[$LO $9-1$ through LO $9-9]$

Croyden is a calendar year, accrual basis corporation. Mr$.$ and Mrs$.$ Croyden $($cash basis taxpayers$)$ are the sole corporate shareholders. Mr$.$ Croyden is president of the corporation, and Mrs$.$ Croyden is vice president. Croyden$$s financial records, prepared in accordance with GAAP, show the following information for the year: Use Table $7-1$ and Table $7-2$

Revenues from sales of goods $ $12,900,000$

Cost of goods sold $($LIFO$)(9,260,000)$

Gross profit $ $3,640,000$

Bad debt expense $ $24,000$

Administrative salaries and wages $612,000$

State and local business taxes $135,000$

Interest expense $33,900$

Advertising $67,000$

Annual property insurance premiums $19,800$

Annual life insurance premiums $7,300$

Depreciation expense $148,800$

Repairs, maintenance, utilities $81,000$

Croyden$$s records reveal the following facts:

Under the UNICAP rules, Croyden had to capitalize $$142,800$ of administrative wages to inventory. These wages were expensed for financial statement purposes.

Because of the UNICAP rules, Croyden$$s cost of goods sold for tax purposes exceeds the cost of goods sold for financial statement purposes by $$219,000.$

Bad debt expense equals the addition to the corporation$$s allowance for bad debts. Actual write$-$offs of uncollectible accounts during the year totaled $$31,200.$

Administrative salaries include an accrued $$50,000$ year$-$end bonus to Mr$.$ Croyden and an accrued $$20,000$ year$-$end bonus to Mrs$.$ Croyden. These bonuses were paid on January $17$ of the following year.

The life insurance premiums were on key$-$person policies for Mr$.$ and Mrs$.$ Croyden. The corporation is the policy beneficiary.

Croyden disposed of two assets during the year. $($These dispositions are not reflected in the financial statement information shown.$)$ It sold office furnishings for $$45,000.$ The original cost of the furnishings was $$40,000,$ and accumulated MACRS depreciation through date of sale was $$12,700.$ It also exchanged transportation equipment for a $15$ percent interest in a partnership. The original cost of the transportation equipment was $$110,000,$ and accumulated MACRS depreciation through date of exchange was $$38,900.$

MACRS depreciation for assets placed in service in prior years $($including the office furnishings and transportation equipment disposed of this year$)$ is $$187,600.$ The only asset acquired this year was new equipment costing $$275,000.$ The equipment has a seven$-$year recovery period and was placed in service on February $11.$ Assume that Croyden does not elect Section $179$ or bonus depreciation with respect to this acquisition.

Croyden$$s prior$-$year tax returns show no nonrecaptured Section $1231$ losses and a $$7,400$ capital loss carryforward.

Required:

Solely on the basis of these facts, compute Croyden$$s taxable income.

Note: Round your intermediate computations to the nearest whole dollar amount.