Question

29. Garner Grocers be income (EBT) over the past several years. The corporate ta rate was 34% each year. Assume tha the company has taken full advantage of the Tax Code's carry-back, carry-forward provisions, au assume that the current provisions were applicable in 2012. What is the amount of taxes t company paid in 2015? gan operations in 2012. Garner has reported the following levels of taxabl Year Taxable Income 2012 2013 2014 2015 $2,250,000 $200,000 $500,000 $2,800,000 a. $484,500 b. $323,000 c. $408,000 d. $425,000 e. $467,500

Answer 1

Taxable income in 2012 = - $2,250,000

Taxable income in 2013 = $200,000

Taxable income in 2013 after set off with taxable income of 2012 = - $2,250,000 + $200,000 = - $2,050,000

Taxable income in 2014 = $500,000

Taxable income in 2014 after set off with taxable income of 2013 = - $2,050,000 + $500,000 = - $1,550,000

Taxable income in 2015 = $2,800,000

Taxable income in 2015 after set off with taxable income of 2014 = - $1,550,000 + $2,800,000 = $1,250,000

Tax @ 34% on $1,250,000 = $1,250,000 * 34% = $425,000

Therefore, the tax that the company should pay in 2015 is $425,000.