Formed in 2012,ABC Ltd.had an operating loss of $95,000,with projected taxable income of $70,000 in 2013,$55,000 in 2014,and $80,000 in 2015.What will the corporate tax liability be in 2015? Assume that ABC is a CCPC in Quebec with a combined federal and provincial corporate income tax rate of 19%.

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Quizplus · Accepted Answer

The corporate tax liability for 2015 can be calculated by first offsetting the operating loss of $95,000 against the projected taxable incomes for 2013, 2014, and 2015. The loss fully offsets the income for 2013 ($70,000) and 2014 ($55,000), leaving a remaining loss of $95,000 - $70,000 - $55,000 = -$30,000 to be applied against the 2015 income of $80,000. This results in a taxable income of $80,000 - $30,000 = $50,000 for 2015. Applying the tax rate of 19% to this amount gives a tax liability of $50,000 * 0.19 = $9,500. However, the correct calculation should consider the full income for 2015 without subtracting the remaining loss, as the initial calculation was incorrect in applying the remaining loss. The correct taxable income for 2015 is $80,000, and applying the 19% tax rate gives a tax liability of $80,000 * 0.19 = $15,200.00.