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In 2018, Uniontown Books had EBIT equal to -$1,200,000. In 2019, its EBIT was $1,800,000. The...

In 2018, Uniontown Books had EBIT equal to -$1,200,000. In 2019, its EBIT was $1,800,000. The company has no debt, and therefore, pays no interest expense. Its corporate tax rate is 25%. What was Uniontown’s tax liability for 2019? (Assume that the company takes full advantage of the carry-forward provision.

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Answer #1
Uniontown Books Amount in( $)
Year
Particulars 2018
EBIT ($1200000)
Income after tax ($1200000)
2019
EBIT 1800000
Less:
Adjusting carry forward loss -1200000
Net income taxable income 600000
Tax rate 25%
Tax liability for 2019 150000

Assumption:-

It is assumed Uniontown eligible for carry forward provision (100%).

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