Clinton Corp. had the following pretax income (loss) over its first three years of operations: For each year there were no deferred income taxes and the tax rate was 40%. For its 2008 tax return, Clinton did not elect a loss carryback. No valuation account was deemed necessary for the deferred tax asset as of December 31, 2008. What was Clinton's income tax expense in 2009?

Question

Quizplus · Accepted Answer

Clinton's income tax expense in 2009 is $600,000. This is because Clinton had a pretax income of $1,000,000 in 2009, and the tax rate is 40%.