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Rover Co. began operations two years ago (Year 1) and recognized $37,000 in business income and $1,000 in taxable capital gains that year. Last year
Rover Co. began operations two years ago (Year 1) and recognized $37,000 in business income and $1,000 in taxable capital gains that year. Last year (Year 2) the company incurred a business loss of $25,000, a taxable capital gain of $2,000, and an allowable capital loss of $5,000. During the current year (Year 3) business income was $50,000, taxable capital gains were $4,000, and the company received $10,000 in dividends from a taxable Canadian corporation. Rover Co. utilizes any unused losses in the earliest years possible. Which of the following taxable incomes are correct after all carry-over adjustments have been made? Multiple Choice Year 1: $12,000; Year 2: $0; Year 3: $52,000 Year 1: $38,000; Year 2: ($28,000); Year 3
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