Question

a company had the following occurred over the past year, a $50,000 operating loss. over the...

a company had the following occurred over the past year, a $50,000 operating loss.

over the next 4 years, the following occurred:

year 1, had net income of $25,000.

year 2, had a net loss of $10,000.

year 3, had net income of $35,000.

in each of the years after the Net Operating Loss", indicate what would be the company's Taxable income in each year.

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Answer #1

in the first year

Carried forward loss -$50000 and net income of $25000

So after net operating loss- net taxable income in the first year will be 0 as there is no profit after adjusting the carried forward loss

In the second year

Carried forward loss($50000-$25000)=$25000

Net income of $10000

So after net operating loss- net taxable income in the first year will be 0 as there is no profit after adjusting the carried forward loss

In the third year

Carried forward loss($25000-$10000)=$15000

Net income of $35000

So after net operating loss- net taxable income in the first year will be $35000-15000 =$20000 after adjusting the pending loss of $15000 against income of $35000

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