Question

The tax return of A tax payer showed that taxable income was SR 100,000 and deductible expenses were SR 125,000 during the taxable year 2016. The tax payer in 2017 realized a tax base indicating net operating profit of SR50,000.

Required: how much net operating losses were in 2016 and how much deductible net operating losses were from 2017 tax base.

plz no pic or handwriting and short answer

Thanx

Answer 1

Since taxation rules of which constituency is not mentioned , I have calcullated as per IRS.

2016 :

Taxable income = SR 100,000

Less :Deductible expenses = (SR 125,000)

Net operating loss = (SR 25,000)

Net operating losses can be carried back 2 years and can be carried forward for 20 years.

2017:

Net operating profit = SR 50,000

Assuming tax rate as 40%

Tax = SR 50,000*40% = SR20,000

less : Net opearting loss of previous year = (SR 25,000)

Net operating loss can be carried forward furthe =(SR 5,000)

Assumed tax percentage as 40%.