Assume that Theodore Enterprises operates in an industry for which NOL carryback is allowed. Theodore Enterprises had the following pretax income (loss) over its first three years of operations:            2019 $ 430,000     2020   (970,000 )   2021   1,360,000        For each year there were no deferred income taxes and the tax rate was 25%. In its 2020 tax return, Theodore elected a net operating loss carryback. No valuation account was deemed necessary for the deferred tax asset as of December 31, 2020. What was Theodore's income tax expense for 2021?

SWFT Comprehensive Volume 2019
42nd Edition
ISBN:9780357233306
Author:Maloney
Publisher:Maloney
Chapter26: Tax Practice And Ethics
Section: Chapter Questions
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Assume that Theodore Enterprises operates in an industry for which NOL carryback is allowed. Theodore Enterprises had the following pretax income (loss) over its first three years of operations:
 

         
2019 $ 430,000    
2020   (970,000 )  
2021   1,360,000    
 

 
For each year there were no deferred income taxes and the tax rate was 25%. In its 2020 tax return, Theodore elected a net operating loss carryback. No valuation account was deemed necessary for the deferred tax asset as of December 31, 2020. What was Theodore's income tax expense for 2021?

 

 
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