1.

Fantino Incorporated was incorporated in 2020 and adopted a calendar year for tax purposes. Here is a schedule of Fantino's taxable income for 2020 and 2021.

	2020	2021
Ordinary income	$ 99,800	$ 168,100
Net capital gain	0	5,800
Taxable income	$ 99,800	$ 173,900

In 2022, Fantino generated $297,300 ordinary income and recognized a $14,000 net capital loss. Which of the following statements is true?

a. Fantino can deduct the capital loss against its 2021 ordinary income, producing $2,940 of tax savings.

b. Fantino can carry the net capital loss back to 2021 and receive a $1,218 refund of 2021 tax.

c. Fantino can carry the net capital loss back to 2020 and receive a $2,940 refund of 2020 tax

d. Fantino can deduct its $14,000 net capital loss only on a carryforward basis.

2. Wondolowski, Inc. produces hats in a foreign country that imposes a 13% VAT. This year, Wondo made 5 million hats, at a material cost of $10 per hat. Selling price of the product was $15 per unit. How much VAT does Wondo owe?

a. $9,750,000

b. $3,250,000

c.$650,000

d. $5,000,000