Question

generally, excess net operating loss from the 2019 tax year will be.....

generally, excess net operating loss from the 2019 tax year will be.....

Homework Answers

Answer #1

generally, excess net operating loss from the 2019 tax year will be.....

In reference to the above statement, net operating loss for income tax computation purpose means when company’s allowable deductions exceed its taxable income within a tax period. Such operating loss can be carried forward to upcoming years and can be offset from future profits until the loss is fully recovered.

However, a net operating loss to a maximum limit of 80% can be carried forward to the next year , for example in 2019 a company had a net operating loss of 10,000 USD again in year 2020 the company made a taxable profit of 12,000 USD , so the net taxable income of 2020 will be    12000 USD less 8,000 USD = 4,000 USD, here 80% of 10,000 USD is being reduced from 2020 profit in order to calculate the net taxable income for the year 2020.

The purpose of this tax provision is to allow and give companies a chance to strengthen their financial condition in the year of loss.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Alto Company incurs a net operating loss in 2019 of $4,000,000. The loss is the same...
Alto Company incurs a net operating loss in 2019 of $4,000,000. The loss is the same for pretax accounting income and for tax purposes (no temporary or permanent differences). Under income tax law, losses may only be carried forward to later years (carrybacks are not permitted). Alto incurs pretax accounting and taxable income of $6,000,000 in 2020 and all of the loss carryforward is used to offset some of the 2020 income on the tax return that year. Alto’s income...
Problem Four Alto Company incurs a net operating loss in 2019 of $4,000,000. The loss is...
Problem Four Alto Company incurs a net operating loss in 2019 of $4,000,000. The loss is the same for pretax accounting income and for tax purposes (no temporary or permanent differences). Under income tax law, losses may only be carried forward to later years (carrybacks are not permitted). Alto incurs pretax accounting and taxable income of $6,000,000 in 2020 and all of the loss carryforward is used to offset some of the 2020 income on the tax return that year....
if a company recognizes a net operating loss this year on its tax return, the results...
if a company recognizes a net operating loss this year on its tax return, the results of this on the financial statement will be: Deferred tax liability will decrease Deferred tax assets will decrease Deferred tax assets will increase Deferred tax liability will increase
Wynn Farms reported a net operating loss of $205,000 for financial reporting and tax purposes in...
Wynn Farms reported a net operating loss of $205,000 for financial reporting and tax purposes in 2021. The enacted tax rate is 25%. Taxable income, tax rates, and income taxes paid in Wynn’s first four years of operation were as follows: Taxable Income Tax Rates Income Taxes Paid 2017 $ 69,000 30 % $ 20,700 2018 79,000 30 23,700 2019 125,000 40 50,000 2020 40,000 45 18,000 Required: 1. NOL carrybacks are not allowed for most companies, except for property...
During 2018, its first year of operations, Baginski Steel Corporation reported a net operating loss of...
During 2018, its first year of operations, Baginski Steel Corporation reported a net operating loss of $405,000 for financial reporting and tax purposes. The enacted tax rate is 40%. Required: 1. Prepare the journal entry to recognize the income tax benefit of the net operating loss. Assume the weight of available evidence suggests future taxable income sufficient to benefit from future deductible amounts from the net operating loss carryforward. 2. Show the lower portion of the 2018 income statement that...
Exercise 16-23 (Algo) Net operating loss carryforward [LO16-7] During 2021, its first year of operations, Baginski...
Exercise 16-23 (Algo) Net operating loss carryforward [LO16-7] During 2021, its first year of operations, Baginski Steel Corporation reported a net operating loss of $424,000 for financial reporting and tax purposes. The enacted tax rate is 25%. Required: 1. Prepare the journal entry to recognize the income tax benefit of the net operating loss. Assume the weight of available evidence suggests that future taxable income will be sufficient to benefit from future deductible amounts arising from the net operating loss...
Cedar Corporation reported a net operating loss in 2018 of $25,000,000. In 2019, Cedar reported taxable...
Cedar Corporation reported a net operating loss in 2018 of $25,000,000. In 2019, Cedar reported taxable income before any NOL carryovers of $20,000,000. What is Cedar’s taxable income in 2019 and any NOL carryover to 2020?
Cedar Corporation reported a net operating loss in 2018 of $25,000,000. In 2019, Cedar reported taxable...
Cedar Corporation reported a net operating loss in 2018 of $25,000,000. In 2019, Cedar reported taxable income before any NOL carryovers of $20,000,000. What is Cedar’s taxable income in 2019 and any NOL carryover to 2020?
Wynn Sheet Metal reported a net operating loss of $116,000 for financial reporting and tax purposes...
Wynn Sheet Metal reported a net operating loss of $116,000 for financial reporting and tax purposes in 2018. The enacted tax rate is 35%. Taxable income, tax rates, and income taxes paid in Wynn’s first four years of operation were as follows: Taxable Income Tax Rates Income Taxes Paid 2014 $ 68,000 25 % $ 17,000 2015 78,000 25 19,500 2016 88,000 35 30,800 2017 68,000 40 27,200 Required: 1. Prepare the journal entry to recognize the income tax benefit...
Wynn Sheet Metal reported a net operating loss of $130,000 for financial reporting and tax purposes...
Wynn Sheet Metal reported a net operating loss of $130,000 for financial reporting and tax purposes in 2018. The enacted tax rate is 30%. Taxable income, tax rates, and income taxes paid in Wynn’s first four years of operation were as follows: Taxable Income Tax Rates Income Taxes Paid 2014 $ 75,000 20 % $ 15,000 2015 85,000 20 17,000 2016 95,000 30 28,500 2017 75,000 40 30,000 Required: 1. Prepare the journal entry to recognize the income tax benefit...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT