Question

A C corporation has a current year loss of $100,000. The corporation had paid

estimated taxes for the year of $10,000 and expects to have this amount refunded when it
files its tax return. Is it possible that the corporation may receive a refund larger than
$10,000? If so, how is it possible? If not, why not?

Answer 1

A C corporation with a current year loss can typically receive a refund up to the amount of estimated taxes paid. However, certain tax credits or additional withheld taxes could lead to a refund larger than the estimated taxes.

Step-by-step explanation:

Regarding your question about whether a C corporation with a current year loss of $100,000, which has paid estimated taxes of $10,000, can receive a refund larger than what it paid: under normal circumstances, a corporation can only be refunded up to the amount of taxes it has paid through estimated tax payments if there are no other credits or offsets involved. However, if the corporation qualifies for certain tax credits or has had taxes withheld in error above the estimated tax, it is possible to receive a refund larger than the amount of estimated taxes paid. Corporate income taxes are based on profits, so if a C corporation experiences a loss, it generally does not owe taxes and thus, is due a refund of its estimated tax payments.