Question

In 2020, Smith Traders Incorporated and reported a net operating loss of $100,000. In 2021, before...

In 2020, Smith Traders Incorporated and reported a net operating loss of $100,000. In 2021, before the NOL deduction, it reported taxable income of $50,000. What is Smith Traders’ 2021 taxable income after the NOL deduction and what is its NOL carryforward to 2022?

a)

$0 taxable income; $50,000 NOL Carryforward

b)

$10,000 taxable income; $60,000 NOL Carryforward

c)

$40,000 taxable income; $60,000 NOL Carryforward

d)

$50,000 taxable income; $100,000 NOL Carryforward
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer :- a) $10000 Taxable Income; $60000 NOL carryforward.

Reason For above answer :-

As per the implementations of TCJA. TCJA has removed Two year carry back provision for tax period starting from Jan 1, 2018 or later on. Howerever it allows for an indefinite carryforward period. "However the carryforward loss are now subjected to 80% of the subsequent year Taxable Income.

So that's why we have Adjusted carryforward of $40000 i.e 80% of $50000, from current year taxable income. And remaining carryforward loss of $60000 shall be allowed for deduction in subsequent years.

Hope this meets your purpose. Do let me know in case of any clarification.

Do like the answer if it was helpful. Best of luck..!!

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Willow Corp. (a C corporation) reported taxable income before the net operating loss deduction (NOL) in...
Willow Corp. (a C corporation) reported taxable income before the net operating loss deduction (NOL) in the amount of $100,000 in 2020. Willow had an NOL carryover of $90,000 to 2020. How much tax will Willow Corp. pay in 2020, what is its NOL carryover to 2021, and what is its NOL carryover to 2021 under the following assumptions? a. $50,000 of the NOL was generated in 2016 and $40,000 of the NOL was generated in 2017.
In 2020, SML Corp. reported taxable income of $100,000 before any NOL deductions. SML has a...
In 2020, SML Corp. reported taxable income of $100,000 before any NOL deductions. SML has a $170,000 NOL carryover that originated in 2017 and a $90,000 NOL carryover that originated in 2018. (Leave no answer blank. Enter zero if applicable.) a. What is SML’s 2020 taxable income after the NOL deduction? b. What NOLs can SML carry over to 2021?
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?
Fore Farms reported a pretax operating loss of $292 million for financial reporting purposes in 2021....
Fore Farms reported a pretax operating loss of $292 million for financial reporting purposes in 2021. Contributing to the loss were (a) a penalty of $4 million assessed by the Environmental Protection Agency for violation of a federal law and paid in 2021 and (b) an estimated loss of $10 million from accruing a loss contingency. The loss will be tax deductible when paid in 2022. The enacted tax rate is 25%. There were no temporary differences at the beginning...
Required information [The following information applies to the questions displayed below.] Willow Corp. (a C corporation)...
Required information [The following information applies to the questions displayed below.] Willow Corp. (a C corporation) reported taxable income before the net operating loss deduction (NOL) in the amount of $100,000 in 2020. Willow had an NOL carryover of $90,000 to 2020. How much tax will Willow Corp. pay in 2020, what is its NOL carryover to 2021, and what is its NOL carryover to 2021 under the following assumptions? a. $50,000 of the NOL was generated in 2016 and...
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...
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...
\Coppertop Company reported the following pretax financial income (loss) for the years 2018 through 2022: 2018...
\Coppertop Company reported the following pretax financial income (loss) for the years 2018 through 2022: 2018 $ 70,000 2019 45,000 2020 (260,000) 2021 90,000 2022 215,000 Pretax financial income (loss) and taxable income (loss) were the same for all years involved. The enacted tax rate was 30% for 2018 through 2020, and 20% for 2021 and thereafter. Instructions (a) Prepare the journal entries for the years 2018 through 2022 to record income tax expense, income tax payable (refundable), and the...
Jennings Inc. reported the following pretax income (loss) and related tax rates during the years 2019–2022....
Jennings Inc. reported the following pretax income (loss) and related tax rates during the years 2019–2022. Pretax Income (loss) Tax Rate 2019 $80,000 40 % 2020 (180,000) 40 % 2021 230,000 20 % 2022 100,000 20 % Pretax financial income (loss) and taxable income (loss) were the same for all years since Jennings began business. The tax rates from 2019–2022 were enacted in 2019. Prepare the journal entries for the years 2020–2022 to record income taxes payable (refundable), income tax...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT