Garner Grocers began operations in 2008. 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 2008. What is the amount of taxes the company paid in 2011?
A) $ 92,055
B) $ 96,900
C) $102,000
D) $107,100
E) $112,455

Question

Quizplus · Accepted Answer

To calculate the amount of taxes paid in 2011, we need to find the taxable income for 2011 and then calculate the taxes payable using the corporate tax rate of 34%.

Since the company has taken advantage of the carry-back and carry-forward provisions, we need to calculate the taxable income for 2011 based on the previous years' losses and/or gains that were carried forward or back.

Using the information provided in the table, we can calculate the taxable income for 2011 as follows:

Taxable income for 2011 = Taxable income for 2010 + carried forward losses - carried back gains

= $372,000 + $24,000 - $96,000 
= $300,000

Next, we can calculate the taxes payable for 2011 as follows:

Taxes payable for 2011 = Taxable income for 2011 x Corporate tax rate 
= $300,000 x 0.34 
= $102,000

Therefore, the amount of taxes the company paid in 2011 is $102,000, which is option C.

Garner Grocers Began Operations in 2008