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What amount of income tax expense was reported

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Question - During its first three years of operations a company reported pre-tax book income of $1,000,000 in year 1, ($1,800,000) in year 2, and $3,000,000 in year 3. The income tax rate for each of the years was 40%. Assume that there were no temporary differences (and no valuation allowance). What amount of income tax expense was reported in year 3 if the company elected a loss carryback at the end of year 2?

a. $1,200,000

b. $880,000

c. $480,000

d. $400,000

Reference no: EM132536536

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