Abdo Corporation received permission to change its tax year-end from December 31 to August 31 in 2013.Its income from January 1 through August 31 is $278,000.What is Abdo's tax liability?
A)$91,670
B)$94,520
C)$108,420
D)$141,780

Question

Quizplus · Accepted Answer

To calculate the tax liability, we need to annualize the income and then apply the corporate tax rates. The income for 8 months is $278,000, so the annualized income is ($278,000 / 8) * 12 = $417,000. Assuming a corporate tax rate of 21% (as per the Tax Cuts and Jobs Act of 2017), the tax liability would be $417,000 * 21% = $87,570. However, since the tax liability is calculated based on the actual period, the correct tax liability for the 8-month period is $278,000 * 21% = $58,380. The closest option to this calculation is $94,520, which suggests a different tax rate or calculation method was used, possibly considering other tax rules or adjustments.

Abdo Corporation Received Permission to Change Its Tax Year-End from December