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 and that it is more likely than not that there will be no taxable earnings after year 7? Assume the year 7 tax rate is known in year 6.

a. $ 9,750

b. $ 11,750

c. $ 24,000

d. $ 26,000

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