Questions by molly04 - Page 69
Over the last five years, corporation A has been consistently profitable. Its earnings before taxes were as follows:Year 1 2 3 4 5Earnings $1,000 $2,800 $4,400 $5,100 $4,700a. If the corporate tax rate was 25 percent, what were the firms income taxes for each year?b. Unfortunately, in year 6 the firm experienced a major decline in sales, which resulted in a loss of $10,800. What impact will the loss have on the firms taxes for each year if the permitted carryback is two years?