During Its First Three Years of Operations a Company Reported

question 86

Multiple Choice

During its first three years of operations a company reported income before taxes of $1,000,000 in year 1, ($1,800,000) in year 2, and $3,000,000 in year 3. The income tax rate applicable to each of the years was 40%. Assume that there weren't any temporary differences and a valuation allowance was not necessary.
-How much income tax expense was reported in year 3 if the company elected a loss carryback?

• A)$1,200,000
• B)$880,000
• C)$480,000
• D)$400,000

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