PT Inc., which has been in business since 1990, uses a fiscal year ending June 30. The shareholders recently voted to dissolve the corporation under state law. PT ceased operations in September and distributed its remaining assets to its shareholders in October. PT’s final tax return for the year beginning on July 1 and ending on October 31 reported $92,000 taxable income.
a. Compute PT’s tax for its last year using the corporate tax rates.
b. Assume that PT operates an ongoing business and filed the short-period return described above because the IRS granted permission to change from a fiscal year ending June 30 to a fiscal year ending October 31. Compute PT’s tax on the income reported on the short-period return.