Shamrock, Inc. reported the following amounts for taxable income (net operating loss) for the first 3...
Shamrock, Inc. reported the following amounts for taxable income (net operating loss) for the first 3 years of its operations; there were no temporary differences in any year and the tax rate was 35% for 2017 and 25% for 2018 and 2019:
2017 $ 100,000
2018 (200,000)
2019 180,000
What amount should Shamrock report as its current income tax expense for 2019?
Homework Answers
Solution:
Current income tax expense for 2019 = (Taxable income - Set off of brought forward losses) * Tax rate
= ($180,000 - $100,000) * 25% = $20,000
Note: Total loss of 2018 is $200,000 out of which $100,000 carry back to 2017 is $100,000 and loss carry forward to 2019 is $100,000.
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