Question

Show the lower portion of the 2013 income statement that reports the income tax benefit of the operating loss.

Option 1:
Income Tax Benefit: $64,000

Option 2:
Income Tax Benefit: $40,000

Option 3:
Income Tax Benefit: $80,000

Option 4:
Income Tax Benefit: $32,000

Answer 1

The income tax benefit from an operating loss can only be determined with the company's specific taxable income data and applicable tax laws. Without this information, we cannot confidently choose among the provided options for the correct income tax benefit figure.

Step-by-step explanation:

The income tax benefit of an operating loss in the lower portion of a 2013 income statement would be based on the application of the tax codes and operating loss carryback or carryforward provisions. Since the question does not provide specific data about the company's operating loss or taxable income, we cannot definitively identify the correct option from the ones provided. To calculate an income tax benefit, a company must first determine its taxable income and then apply the current tax laws to find out if it can benefit from a tax refund or reduce its tax liability for the reported year or future years due to the operating loss.

For instance, if we had taxable income and knew the specific tax rates and laws applicable, we could use formulas similar to the provided examples, such as economic profit calculation or determining taxes owed from a given taxable income level. However, without additional information about the company's financials or the tax laws in effect for the year 2013, we cannot select one of the provided income tax benefit options with confidence.