The following information pertains to XYZ Inc.: Assuming that XYZ has a policy of applying its tax losses,sequentially,how much would the company be able to recover in taxes through the use of its 2014 tax loss?
A) $152,000
B) $133,000
C) $141,600
D) $145,000

Question

The following information pertains to XYZ Inc.:  Assuming that XYZ has a policy of applying its tax losses,sequentially,how much would the company be able to recover in taxes through the use of its 2014 tax loss?
A) $152,000 
B) $133,000 
C) $141,600 
D) $145,000

Quizplus · Accepted Answer

The information provided in the identifier code 11ea71d0_1fd3_c551_89cd_8fe75affdca7_TB2440_00 indicates that the company has a 2014 tax loss carry-forward of $282,000. If the company applies its tax losses sequentially, it will first use the 2011 tax loss of $60,000 and then use the 2014 tax loss. Therefore, the company will be able to recover taxes on $282,000 - $60,000 = $222,000. The tax rate is given as 40%, so the tax recovery amount will be $222,000 * 0.40 = $88,800 per year. Thus, the company will recover $88,800 * 1.6 years = $141,600 in taxes through the use of its 2014 tax loss. Therefore, the best choice is C.

The Following Information Pertains to XYZ Inc