Critical Reasoning

State X’s income-averaging law allows a portion of one’s income to be taxed at lower rate than the rate based on one’s total taxable income. To use income averaging, the taxpayer must have earned taxable income for a particular year that exceeds 140 percent of his or her average taxable income for the previous three years. People using income averaging owe less tax for that year than they would without income averaging.
Which of the following individuals would be most seriously affected if income averaging were not permitted in computing the taxes owed for current year?
(A) Individuals whose income has steadily decreased for the past three years
(B) Individuals whose income increased by 50 percent four years ago and has remained the same since then
(C) Individuals whose income has doubled this year after remaining about the same for five years
(D) Individuals who had no income this year, but did in each of the previous three years
(E) Individuals who are retired and whose income has remained about the same for the past ten years

C?

A. not affected as their incomes have been decreasing, (thier tax liabilites also would have been decreasing). they wouldnt have been eligible for the income averaging even if it was allowed as it requires increasing incomes

B. not affected this year as thier incomes have remained the same for the past 4 years, so they wouldnt have been elibile for the income averaging rule even if it had been allowed.

C. affected. doubled=200% of the the average taxable income of the previous years. meets the criteria of 140% of average of previous years. these are the individuals which would have been allowed to use income averaging if it had been permitted to be used. income

D. not affected at all. no income=no tax!.

E. not affected, same income for the last 10 years, no change this year.

IMO (C).

Rohit.

IMO C....

Guys can anyone give a decent reason why C is not right.