Section 1: Gross Income

1. Gross receipts or sales: $1,250,000. Returns and allowances: $50,000. Balance: $1,200,000.

2. Cost of goods sold (attach Form 1125-A): $450,000.

3. Gross profit. Subtract line 2 from line 1c: $750,000.

Section 2: Deductions

12. Compensation of officers (attach Form 1125-E): $120,000.

13. Salaries and wages (less employment credits): $300,000.

14. Repairs and maintenance: $15,000.

16. Rents: $60,000.

20. Depreciation from Form 4562 not claimed on Form 1125-A: The corporation claims a Section 179 deduction of $45,000 for newly acquired server equipment, and MACRS depreciation of $12,500 for existing assets. Total depreciation: $57,500.

Section 3: Tax and Payments

30. Taxable income. Subtract line 29c from line 28: $197,500.

31. Total tax (attach Form 1120, Schedule J): Calculated at flat 21% rate resulting in $41,475.