In 2011,T Corporation changed its tax year from ending each September 30th to ending each December 31st.The corporation earned $25,000 during the period October 1,2011 through December 31,2011.The tax on the annualized income for the short period will be greater than the tax on $25,000 when the tax rates are progressive.

Question

Quizplus · Accepted Answer

The annualized income for the short period will be calculated by multiplying the actual income earned during the short period by 12/3, which is 4. Therefore, the annualized income for the short period will be $100,000 ($25,000 x 4). Since the tax rates are progressive, the tax on $100,000 will be greater than the tax on $25,000, making the statement true.

In 2011,T Corporation Changed Its Tax Year from Ending Each