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The following information for JG Corporation is available: Year Taxable Income Tax Rate Income taxes Paid 20x1 $30,000 45% $13,500 20x2 $90,000 38% $34,200 20x3 $85,000 38% $32,300 20x4 $(150,000) 40% - JG carries applies its tax losses sequentially, that is, tax losses are carried back as far as possible
The following information for JG Corporation is available:
Year Taxable Income Tax Rate Income taxes Paid
20x1 $30,000 45% $13,500
20x2 $90,000 38% $34,200
20x3 $85,000 38% $32,300
20x4 $(150,000) 40% -
JG carries applies its tax losses sequentially, that is, tax losses are carried back as far as possible. The taxes recovered for the year ended 2014 amounted to:
A) $48,600.
B) $46,600.
C) $52,660.
D.) $59,100
Expert Solution
Computation of the amount of taxes recovered for the year ended 2014:-
Amount of tax recovered = (Loss carryback to 2011 * Tax rate) + (Loss carryback to 2012&2013 * Tax rate)
= ($30,000 * 45%) + (($150,000 - $30,000) * 38%)
= $13,500 + ($120,000 * 38%)
= $13,500 + $45,600
= $59,100
Hence, the correct option is D) $59,100
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