In the First Two Years of Operations,a Company Reports Taxable

question 80

Essay

In the first two years of operations,a company reports taxable income of $115,000 and $165,000,respectively.In the first two years,the tax rates were 38% and 32% respectively.It is now the end of the third year,and the company has a loss of$160,000 for tax purposes.The company carries losses to the earliest year possible.The tax rate is currently 25%.
Requirement:
a.How much tax was paid in year 1 and year 2?
b.Compute the amount of income tax payable or receivable in the current (third)year.

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Definitions:

Global Trends

Predominant patterns, changes, or developments that affect the world as a whole, including economic, environmental, and social shifts.

Niche Markets

Segmented parts of a broader market defined by unique preferences, characteristics, or needs of a specific group of customers.

Sustainable Competitive Advantages

Long-term attributes or capabilities that allow a company to outperform its competitors.

Strategic Business Units

An autonomous division within a larger parent company that focuses on a specific market sector or product line.