Formed in 2012, the 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 operating loss of $95,000 can be carried forward to offset future taxable income. By 2015, the company will have used $70,000 in 2013 and $25,000 in 2014, leaving $0 to offset in 2015. Thus, the taxable income in 2015 is $80,000. The tax liability is 19% of $80,000, which is $15,200.00.