Mobe Co. reported the following operating income (loss) for its first three years of operations:
1992 $ 300,000
1993  (700,000)
1994  1,200,000

For each year, there were no deferred income taxes (before 1992), and Mobe's effective income tax rate was 30%.  In its 1993 income tax return, Mobe elected the two year carry back of the loss.  In its 1994 income statement, what amount should Mobe report as total income tax expense?

I thought the income tax for 1994 should be $1,200,000-(700,000-300,000)*30%=240,000. But the becker solution adds 120,000 to the 240,000 to get 360,000, which does not make sense to me, anyone can help me out?

Thanks, Jams,

But I thought that 400,000 loss carryforward has been absorbed by the 1,200,000 income in 1994, how could it still be an asset?