Luther Industries has outstanding tax loss carryforwards of $ 72 million from losses over the past four years. If Luther earns $15 million per year in pretax income from now on, in how many years will Luther first pay taxes?

Luther will have to pay some taxes after four years i. e five years from now

Explanation:

Data provided in the question:

Outstanding tax loss carryforwards = $72 million

Number of years the tax loss carry-forwards will last

= (Tax loss carry-forward) : (Annual pretax income)

= (72 million) : (15 million per year)

= 4.8 years

Thus,

Luther will not pay taxes for the next four years

Hence,

Luther will have to pay some taxes after four years i. e five years from now.