Carlson Corp. reported the following pretax accounting income and taxable income

Question

Carlson Corp. reported the following pretax accounting income and taxable income for its first three years of operations:

                        2012     $ 400,000      

                        2013      (700,000)     

                        2014        800,000      

Carlson's tax rate is 40% for all years.

Assuming that Carlson elected a loss carryback, what would be the net loss in 2013 reported on its income statement?

Answer

$420,000.

$240,000.

$  90,000.

$  60,000.

$420,000.

$240,000.

$  90,000.

$  60,000.

Explanation / Answer

the net loss in 2013 reported on its income statement = 700000 x (1 - 0.4) = $420000

Hence, option A is correct

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