Garner Grocers began operations in 2009. 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 2009. What is the amount of taxes the company paid in 2012?
A) $ 92,055
B) $ 96,900
C) $102,000
D) $107,100
E) $112,455

Question

Quizplus · Accepted Answer

To calculate the taxes paid in 2012, we need to first calculate the taxable income for 2012.

From the information given in the question, we know that Garner has taken full advantage of the Tax Code's carry-back, carry-forward provisions, and assume that the current provisions were applicable in 2009. This means that any losses incurred in one year can be carried back or forward to reduce taxes in other years.

Using this information, we can calculate the taxable income for 2012 as follows:

Taxable income for 2012 = Taxable income in 2012 + Tax credit from loss carryforward - Tax liability from loss carryback

= $360,000 + $45,000 - $90,000

= $315,000

Now we can calculate the taxes paid in 2012:

Taxes = Taxable income * Tax rate

= $315,000 * 0.34

= $107,100

Therefore, the correct answer is choice C, $102,000.

Garner Grocers Began Operations in 2009