Last year Cell 2 had a net operating loss of $120,000 and a capital loss of $80,000. This year (2010) the firm has an operating income of $230,000 and a capital gain of $40,000. What is Cell 2's tax liability this year? Assume there are no other tax loss carry backs or carry forwards.
A) $4,500
B) $72,950
C) $26,150
D) $12,500

Question

Quizplus · Accepted Answer

Solution:
Tax = 22,250 + 10,000(.39) = $26,150

Last Year Cell 2 Had a Net Operating Loss of $120,000