Garner Grocers began operations in 2012.Garner has reported the following levels of taxable income (EBT)over the past several years.The corporate tax rate was 34% each year.Assume that the company has taken full advantage of the Tax Code's carry-back,carry-forward provisions,and assume that the current provisions were applicable in 2012.What is the amount of taxes the company paid in 2015?

Question

Garner Grocers began operations in 2012.Garner has reported the following levels of taxable income (EBT)over the past several years.The corporate tax rate was 34% each year.Assume that the company has taken full advantage of the Tax Code's carry-back,carry-forward provisions,and assume that the current provisions were applicable in 2012.What is the amount of taxes the company paid in 2015?  ​

Quizplus · Accepted Answer

To find the taxes paid in 2015, we need to calculate the taxable income and then apply the tax rate of 34%. We also need to take into account any carry-back or carry-forward provisions.

From the table, we can see that the taxable income for 2015 is $1,500,000. We also know that the company has taken advantage of the carry-back and carry-forward provisions. This means that the company may have had taxable losses in previous years that can be used to offset the taxable income in 2015.

To calculate the taxable income and taxes paid in 2015, we need to work backwards through the previous years. Starting with 2015:

Taxable income for 2015: $1,500,000
Tax paid for 2015: 34% x $1,500,000 = $510,000

Now we need to consider any previous taxable losses that can be used to offset this income. Looking at the table, we can see that the company had a taxable loss of $500,000 in 2014. This loss can be carried back to 2012:

Taxable income for 2012: $2,000,000 - $500,000 = $1,500,000
Tax paid for 2012: 34% x $1,500,000 = $510,000
Taxable loss to be carried forward to 2013: $500,000

Moving on to 2013:

Taxable income for 2013: $1,000,000
Tax paid for 2013: 34% x $1,000,000 = $340,000
Taxable loss to be carried forward to 2014: $500,000 - $340,000 = $160,000

Finally, we can calculate the taxable income and taxes for 2014:

Taxable income for 2014: $0 (due to the $500,000 taxable loss)
Tax paid for 2014: $0
Taxable loss to be carried forward to 2015: $160,000

Now we have all the information we need to calculate the total taxes paid by the company in 2015:

Tax paid for 2015: $510,000
Tax paid for 2014: $0 (due to the carry-back provision)
Tax paid for 2013: $340,000
Tax paid for 2012: $510,000

Total taxes paid by the company in 2015: $510,000 + $0 + $340,000 + $510,000 = $1,360,000
Adjusted for the tax rate of 34%, the amount of taxes the company paid in 2015 is $425,000.

Garner Grocers Began Operations in 2012