Fox Co. reported the following operating income (loss) for its first three years of operations: Year 1 $ 300,000 Year 2 (700,000) Year 3 1,200,000 For each year, there were no deferred income taxes, and Fox's effective income tax rate was 30%. In its year 2 income tax return, Fox elected to carry back the maximum amount of loss possible. Additionally, there was more negative evidence than positive evidence concerning profitability for Fox in year 3. In its year 3 income statement, what amount should Fox report as total income tax expense?

Question

Business

Guillermo Green

9 October, 00:43

Fox Co. reported the following operating income (loss) for its first three years of operations: Year 1 $ 300,000 Year 2 (700,000) Year 3 1,200,000 For each year, there were no deferred income taxes, and Fox's effective income tax rate was 30%. In its year 2 income tax return, Fox elected to carry back the maximum amount of loss possible. Additionally, there was more negative evidence than positive evidence concerning profitability for Fox in year 3. In its year 3 income statement, what amount should Fox report as total income tax expense?

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Answers (1)

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James Yu · Answer 1

The amount that Fox should report as total income tax expense is $150,000.

Explanation:

net income = $1,200,00 - $700,000

= $1,500,000

Therefore, The amount that Fox should report as total income tax expense is 1500000*30% = $150,000