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:

Actual Cause

also known as "cause in fact," it refers to the factual determination that a defendant's actions are the direct cause of an event or damage.

Plaintiff's Injury

The harm or damage suffered by the plaintiff that forms the basis of their claim in a lawsuit.

Negligence Per Se

is a legal doctrine that deems an act as negligent because it violates a statute or regulation.

Noise Pollution

Unwanted or harmful outdoor sound created by human activities, such as traffic, construction, or industrial operations.