The pretax financial income and taxable income of Zeus Corporation were the same for the following years ( i. e., there were no permanent or temporary differences):

What amount of income tax benefit will Zeus Corporation record in year 6 under U. S. GAAP, assuming that Zeus elects to use the two- year carry back/ 20- year carry forward option? Assume the Year 7 tax rate is known in Year 6 and is enacted at the beginning of Year 7.
a. $ 25,000
b. $ 26,000
c. $ 35,750
d. $ 37,750

Transcribed Image Text:

Year 4 Year 5 Year 6 Year 7 Income S 20,000 15,000 (100,000) 70,000 Tax Rate 30% 25% 25% 40%