Reliable Corp. had a pretax accounting income of $30 million this year. This included the collection of $40 million of life insurance proceeds when several key executives died in a plane crash. Temporary differences for the current year netted out to zero. Reliable has had a 40% tax rate and taxable income of $120 million over the previous two years and plans to elect a net operating loss carryback for tax purposes. In the current year financial statements, Reliable would report:
A) Net income of $34 million.
B) A tax benefit of $10 million.
C) Net income of $26 million.
D) A deferred tax asset of $4 million.
Correct Answer:
Verified
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