A firm has taxable income and income tax payments shown below. Year 2014 2015 20
ID: 2618423 • Letter: A
Question
A firm has taxable income and income tax payments shown below.
Year
2014
2015
2016
2017
Taxable income
$15,000
$5,000
$10,000
$4,000
Tax payment
$2,250
$750
$1,500
$600
Tax rate was fixed at 15% for all four years. In 2018, the firm has incurred an operating loss of $22,000. Using the loss carry-back, what is the total tax refund for 2016?
____
$3,000
$2,850
$2,100
$450
Year
2014
2015
2016
2017
Taxable income
$15,000
$5,000
$10,000
$4,000
Tax payment
$2,250
$750
$1,500
$600
Explanation / Answer
Loss carry back only go back to two years so the correct option will be option 3 i.e., $2100 (1500 + 600)
Total tax refund for 2016 = $2100
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