Martin Company reported an extraordinary after-tax loss of $180,000,resulting from an earthquake.What must have been the before-tax loss if Martin's marginal income tax rate was 40%?

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The after-tax loss is calculated as the before-tax loss minus the tax savings on the loss. If the after-tax loss is $180,000 and the tax rate is 40%, then the before-tax loss can be calculated as $180,000 / (1 - 0.40) = $300,000.

Martin Company Reported an Extraordinary After-Tax Loss of $180,000,resulting from an Earthquake.What