Coffee Co Began Operations in 20x0 and Recognized $37,000 in Business

Coffee Co. began operations in 20x0 and recognized $37,000 in business income and $1,000 in taxable capital gains that year. In 20x1, the company incurred a business loss of $25,000, a taxable capital gain of $2,000, and an allowable capital loss of $5,000. Business income for 20x2 was $50,000, taxable capital gains were $4,000, and the company received $10,000 in dividends from a taxable Canadian corporation. Coffee 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?

A) 20x0: $12,000; 20x1: $0; 20x2: $52,000
B) 20x0: $38,000; 20x1: ($28,000) ; 20x2: $64,000
C) 20x0: $13,000; 20x1: ($0; 20x2: $61,000
D) 20x0: $37,000; 20x1: $0; 20x2: $27,000

Correct Answer:

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