A corporation suffers a loss from a discontinued operation of $60,000. The company is subject to a tax rate of 40%. Which of the following describes the tax effect of the loss?

Question

Quizplus · Accepted Answer

The loss results in a tax savings because it reduces taxable income. The savings is calculated as the loss amount ($60,000) multiplied by the tax rate (40%), which equals $24,000.

A Corporation Suffers a Loss from a Discontinued Operation of $60,000