During 2008, Pet Kingdom made estimated tax payments of

During 2008, Pet Kingdom made estimated tax payments of $56,000 each quarter to the IRS. Determine Pet Kingdom’s income tax liability for tax year 2008 providing the following information that would be reported on Form 1120 and supporting schedules.

If an answer is zero, enter “0”.

Enter all amounts as positive numbers.

If required, round final answers to the nearest dollar.

Assume a 21% corporate tax rate.

Make realistic assumptions about any missing data.

Note: This problem is for the 2008 tax year.

On November 1, 2008, Janet Morton and Kim Wong formed Pet Kingdom, Inc., to sell pets and pet supplies. Pertinent information regarding Pet Kingdom is summarized as follows:

Pet Kingdom’s business address is 1010 Northwest Parkway, Dallas, TX 75225; its telephone number is (214) 555-2211; and its e-mail address is petkingdom@pki.com.

The employer identification number is 11-1111111, and the principal business activity code is 453910.

Janet and Kim each own 50% of the common stock; Janet is president and Kim is vice president of the company. No other class of stock is authorized.

Both Janet and Kim are full-time employees of Pet Kingdom. Janet’s Social Security number is 123-45-6789, and Kim’s Social Security number is 987-65-4321.

Pet Kingdom is an accrual method, calendar year taxpayer. Inventories are determined using FIFO and the lower of cost or market method. Pet Kingdom uses the straight-line method of depreciation for book purposes and accelerated depreciation (MACRS) for tax purposes.

During 2008, the corporation distributed cash dividends of $250,000.

Pet Kingdom’s financial statements for 2008 are shown below.

*Depreciation for tax purposes is $136,000.

Provide the following that would be reported on Pet Kingdom’s Form 1125-E.

1. Amount of compensation for Janet Morton.
$

2. Amount of compensation for Kim Wong.