Question: Collins Co. began operations in 2002. The company lost money the first 2 years, but has been profitable ever since. The company's taxable income (EBT) for its first 4 years are summarized below:
|
Year
|
EBT
|
|
2002
|
-$3.0 million
|
|
2003
|
-5.2 million
|
|
2004
|
4.2 million
|
|
2005
|
8.3 million
|
The corporate tax rate has remained at 40 percent. Suppose that the company has taken full benefits of the Tax Code's carry-back; carry-forward provisions, and assume that the current provisions were applicable in 1999. Calculate the Collins' tax liability for 2005.
[A] $3.32 million
[B] $0.04 million
[C] $2.84 million
[D] $1.72 million
[E] $1.24 million