Collins Co.began operations in 2011.The company lost money the first two years,but has been profitable ever since.The company's taxable income (EBT)for its first four years is summarized below:
The corporate tax rate has remained at 34%.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 2011.What is Collins' tax liability for 2014?

Question

Quizplus · Accepted Answer

First, we need to calculate the taxable income for 2014:
Taxable income for 2014 = Total taxable income for 2011-2014 – Total carry-backs and carry-forwards
= ($2,600,000 - $850,000 - $320,000 - $680,000) = $750,000

Next, we can calculate the tax liability for 2014 using the corporate tax rate of 34%:
Tax liability for 2014 = Taxable income for 2014 x Corporate tax rate
= ($750,000 x 0.34) = $255,000

Therefore, the correct answer is D) $1,462,000.