Question: American Century Corp. is considering acquiring Southern Homes, Inc. Southern Homes has a tax loss carry forward of $240,000. Projected earnings for American Century Corp. are as follows:
a. How much of American Century's total taxes can be reduced by the tax loss carryforward? Keep in mind its tax rate is 30 percent as shown above.
b. How much will the total income to shareholders be for each year if the acquisition occurs?