The Dot Corporation has changed its year-end from a calendar year-end to July 31.The income for its short period from January 1 to July 31 is $35,000.The tax for this short period is:

Question

Quizplus · Accepted Answer

The tax for a corporation with taxable income of $35,000 is $5,250 for a full year. Since the short period is 7 months, the tax for this period would be approximately $3,638 ($5,250 x 7/12). However, the tax for the short period is likely to be higher than this amount because of differences in the tax rates for different portions of the year. Based on this, option B is the closest estimate to the actual tax liability for the short period.

The Dot Corporation Has Changed Its Year-End from a Calendar