In 2018,Garner Grocers had taxable income of -$2,000,000.The corporate tax rate is 25%.Assume that the company takes full advantage of the Tax Code's carry-forward provision.In 2019,Garner has taxable income of $1,000,000.What is the amount of taxes the company paid in 2019?

Question

In 2018,Garner Grocers had taxable income of -$2,000,000.The corporate tax rate is 25%.Assume that the company takes full advantage of the Tax Code's carry-forward provision.In 2019,Garner has taxable income of $1,000,000.What is the amount of taxes the company paid in 2019? ​

Quizplus · Accepted Answer

Since Garner Grocers had a taxable income of -$2,000,000 in 2018, it means they operated at a loss. With a corporate tax rate of 25%, and assuming they can carry forward this loss to offset future taxable income, in 2019, their taxable income would be reduced by the previous loss. Therefore, their taxable income for 2019 would effectively be $0 ($1,000,000 - $2,000,000), resulting in $0 taxes paid.

In 2018,Garner Grocers Had Taxable Income of -$2,000,000