In the First Two Years of Operations, a Company Reports

question 62

Essay

In the first two years of operations, a company reports taxable income of $125,000 and $65,000, respectively. In the first two years, the company paid $50,000 and $13,000. 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%.
Required:
Compute the amount of income tax payable or receivable in the current (third)year.

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Definitions:

Developed Countries

Countries with strong economies and advanced technological infrastructure relative to other less industrialized nations.

Underdeveloped Countries

Nations characterized by low levels of economic productivity, poor infrastructure, and limited access to basic needs and services for their populations.

Colonial Past

Refers to the period of history when various European nations established, exploited, and maintained colonies in other regions of the world.

Prosperous Country

A nation characterized by economic growth, high standards of living, and general well-being among its citizens.