Sky Company reports a pretax operating loss of $50,000 in Year 3 for both financial reporting and

Question:

Sky Company reports a pretax operating loss of $50,000 in Year 3 for both financial reporting and income tax purposes. Its reported pretax financial income and taxable income for the previous two years had been: Year 1: $25,000 (tax rate 30%) and Year 2: $35,000 (tax rate 35%). Calculate Sky Company’s income tax refund for Year 3.