A company had taxable income of $2 million in fiscal 2013 and paid taxes of 7.7 million; the company incurred a loss of $8 million in fiscal 2015 when the tax rate is 50%.How much refund is the company entitled to?

Question

Quizplus · Accepted Answer

The company can carry back the loss of $8 million to offset the taxable income of $2 million from fiscal 2013. With a tax rate of 50%, this results in a tax refund of 50% of $2 million, which is $1 million. However, since the company initially paid $7.7 million on $2 million of income, it indicates an overpayment or a tax rate higher than 50%. The actual refund would be the tax paid on the $2 million income, which is $7.7 million * ($2 million / $2 million) = $7.7 million. However, since the question implies a standard tax treatment without considering overpayment, the closest answer reflecting a standard 50% tax rate on the $2 million income is $1 million, which is not listed. Therefore, the correct choice based on standard tax treatment and the options provided would be $0.7 million, acknowledging a possible misunderstanding in the question's tax rate application or a typo in the options.

A Company Had Taxable Income of $2 Million in Fiscal