Question

Wilcox Corporation reported the following results for its first three years of operation: 2020 income (before income taxes): $300,000 2021 loss (before income taxes): $(2,700,000) 2022 income (before income taxes): $3,000,000 There were no permanent or temporary differences during these three years. Assume a corporate tax rate of 20% for 2020 and 2021, and 30% for 2022. Assuming that Wilcox elects to use the carryforward provision and not the carryback provision, what income (loss) is reported in 2021

Answer 1

Answer:

$1,890,000

Explanation:

Calculation to determine what income (loss) is reported in 2021

2021 Reported Income loss=[$2,700,000-($2,700,000 × 30%)]

2021 Reported Income loss=($2,700,000-$810,000)

2021 Reported Income loss=$1,890,000

Therefore the income (loss) that is reported in 2021 will be $1,890,000