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How much did the company pay in taxes

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Appalachian Airlines began operating in 2004. The company lost money the first year but has been profitable ever since. The company's taxable income (EBT) for its first five years is listed below. Each year the company's corporate tax rate has been 40%.

Year       Taxable Income

2004            -$7,000,000
2005             $1,000,000
2006               $2,000,000
2007              $3,000,000
2008               $5,000,000

Problem 1: Assume that the company has taken full advantage of the Tax Code's carry-back, carry-forward provisions and that the current provisions were applicable in 2004. How much did the company pay in taxes in 2008?

a. $0
b. 800,000
c. 400,000
d. 1,600,000
e. None of the above

Reference no: EM132996106

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