In Its First Year of Operations, a Company Reported Taxable

question 75

Multiple Choice

In its first year of operations, a company reported taxable income of $200,000. In its second year the company incurred a $250,000 loss. During these first two years, the tax rates were 30% and 35% respectively. It is now the end of the third year, and the company a taxable income of $260,000. The company carries losses to the earliest year possible. The tax rate is currently 40%. The amount of income tax receivable or payable in the current (third) year is:

• A)$104,000 payable.
• B)$27,500 receivable.
• C)$76,500 payable.
• D)$16,500 payable.

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Definitions:

Contingency Anchor

A concept in decision-making and planning that deals with uncertainties by identifying and preparing for potential variations from expected outcomes or conditions.

Diagnose

The process of identifying the nature of a problem, issue, or situation through analysis of its symptoms or characteristics.

Appropriate Action

refers to behavior or decisions that are suitable or fitting for a particular situation, context, or set of circumstances.

Qualitative Research

A research method focused on understanding concepts, thoughts, or experiences through analysis of textual, visual, or auditory data, rather than numerical.