A corporation reported the following incomes (losses) for the ten year period, 1996-2005:

YEAR INCOME(LOSS) TAX RATE INCOME TAX PAID
1996 16,000 50% $8,000
1997 (40,000) 50% 0
1998 16,000 48% 7,680
1999 24,000 48% 11,520
2000 (32,000) 45% 0
2001 16,000 42% 6,720
2002 32,000 42% 13,440
2003 64,000 34% 21,760
2004 80,000 34% 27,200
2005 (16,000) 30% 0

Applying carryback provisions in the tax law, compute net amount of taxes paid (amounts paid less refunds) for the ten year period ending December 31, 2005.

Hello,

From my understanding of corporate tax, I have given this a shot:

Taxes Paid Per Year
1996 8,000
1997 (refund of 8,000)
1998 0 (since you can carry forward the 40,000 loss of last year, 40,000 less 16K you used for 1996)

1999 (Loss valued at 40-16-16 = 8,000). So pay tax on 16,000 at 48% = 7,680

2000 (refund of 7,680)
2001 (apply Loss 32,000 less 16,000 = 16,000). Therefore, no taxes need to be paid

2002 13,440
2003 21,760
2004 27,200
2005 (carry the loss back to the 3rd most year, that being 2002... can claim back half (16 of 32), so a refund of 6,720