Thaddeus Conway Corporation reported the following activity during the current year: Gross Profit $69,000,000
Operating Expenses ($57,000,000)
Captial Gains $17,000,000
Capital Losses ($24,000,000)
The corporation's tax liability amounts to:
a) some other amount
b) $1,050,000
c) $6,090,000
d) $2,520,000

$2,520,000

Explanation:

Capital gains of $17,000,000 will setted off against the loss of 24,000,000 and the remaining 7,000,000 will be carried forward for the next year.

DATA

Gross Profit               = $69,000,000

Operating Expenses = ($57,000,000)

Captial Gains             = $17,000,000

Capital Losses            = ($24,000,000)

Tax Rate  = 21%

Calculation

Taxable Income = $69,000,000 - $57,000,000 = $12,000,000

Tax Liability = Taxable Income * Tax Rate  

Tax Liability = $12,000,000 * 21%

Tax Liability = $2,520,000

NOTE: Any Capital losses of the corporation can be set off against the Capital gains of the year

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