Katt CoBegan Operations Two Years Ago (Year 1) and Recognized $37,000

question 2

Multiple Choice

Katt Co.began operations two years ago (Year 1) and recognized $37,000 in business income and $1,000 in taxable capital gains that year.Last year (Year 2) the company incurred a business loss of $25,000, a taxable capital gain of $2,000, and an allowable capital loss of $5,000.During the current year (Year 3) business income was $50,000, taxable capital gains were $4,000, and the company received $10,000 in dividends from a taxable Canadian corporation.Katt Co.utilizes any unused losses in the earliest years possible, Which of the following taxable incomes are correct after all carry-over adjustments have been made?

• A)Year 1: $12,000; Year 2: $0; Year 3: $52,000
• B)Year 1: $38,000; Year 2: ($28,000); Year 3: $64,000
• C)Year 1: $13,000; Year 2: $0; Year 3: $61,000
• D)Year 1: $37,000; Year 2: $0; Year 3: $27,000

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Definitions:

Care

The provision of what is necessary for the health, welfare, maintenance, and protection of someone or something.

Generativity

The concern for establishing and guiding the next generation, often expressed through parenting, teaching, or mentorship.

Personal Constructs

Theoretical constructs in psychology that refer to the individual ways of construing or understanding the world and people around us, as proposed by George Kelly.

Ego-idealizations

The process of constructing an ideal version of oneself that a person strives to achieve, often influenced by societal and personal values.