Before Considering a Net Operating Loss Carryforward of $80 Million

question 43

Multiple Choice

Before considering a net operating loss carryforward of $80 million, Fama Corporation reported $200 million of pretax accounting and taxable income in the current year. The income tax rate for all previous years was 40%. On January 1 of the current year, a new tax law was enacted, reducing the rate to 30% effective immediately. Fama's income tax payable for the current year would be:

• A) $48 million.
• B) $28 million.
• C) $60 million.
• D) $36 million.

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